CI&T Inc 6-K, filed May 19, 2023
CI&T Inc (CINT)
About this 6-K
CI&T Inc filed this 6-K on May 19, 2023.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
|
Form 6-K |
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13A-16 OR 15D-16
UNDERTHE SECURITIES EXCHANGE ACT OF 1934
For the month of May 2023
Commission File Number: 001-41035
CI&T INC
(Translation of registrant’s name into English)
Estrada Guiseppina Vianelli De Napoli, 1455 – C,
Globaltech 13.100-000 - Brazil
Campinas-State of São Paulo
+55 19 21024500
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F ☒ Form 40-F ☐
CI&T Inc
TABLE OF CONTENTS
ITEM
- 1Q23 Earnings Release
- Unaudited condensed consolidated interim financial information for the three-month period ended March 31, 2023.
- CI&T Board of Directors approves share repurchase program
CI&T Reports Solid Results in 1Q23
New York - May 19, 2023 /Business Wire/ - CI&T (NYSE: CINT, “Company”), a global digital specialist, today announces its results for the first quarter of 2023 (1Q23) in accordance with International Financial Reporting Standards (IFRS). For comparison purposes, we refer to the results for the first quarter of 2022 (1Q22).
First Quarter of 2023 Operating and Financial Highlights
●Net Revenue was R$610.0 million, an increase of 24.0% compared to 1Q22 or a 24.3% growth at constant currency.
●The number of clients with annual revenue above R$1 million in the last twelve months grew from 110 in 1Q22 to 180 in 1Q23.
●Net Profit was R$52.4 million compared to R$29.2 million in 1Q22, a 79.2% increase year over year.
●Adjusted EBITDA was R$116.5 million, a 37.9% growth year-over-year, equivalent to an Adjusted EBITDA margin of 19.1%.
●Adjusted Net Profit was R$67.2 million, 70% higher than 1Q22, with an Adjusted Net Profit margin of 11.0%.
●Cash generated from operating activities was R$116.5 million in 1Q23, compared to a cash consumption of R$47.0 million in 1Q22.
●CI&T ended 1Q23 with 6,522 CI&Ters, compared to 6,435 at the end of 1Q22.
Cesar Gon, founder and CEO of CI&T, commented, "I'm glad to kick off this cloudy 2023 with solid results from top to bottom, demonstrating our agility in maintaining a lean structure and adapting to changes in the external market environment.
At the same time, I believe that we are on the verge of probably the most disruptive moment in the history of computers on Earth. AI is a transformative technology with real-world applications and rapid advancements. And we, at CI&T, are moving thoughtfully fast with our clients, co-creating the future in this new chapter of innovation and endless possibilities."
Comments on the 1Q23 financial performance
The net revenue was R$610.0 million in 1Q23, an increase of 24.0% compared to 1Q22, or a 24.3% net revenue growth at constant currency. We experienced growth in net revenue across all regions we operate in compared to the same period last year.
The cost of services provided in 1Q23 reached R$407.9 million, 24.0% higher in relation to 1Q22, and the gross profit was R$202.1 million. The Adjusted Gross Profit in 1Q23 was R$213.9 million, an increase of 23.4% compared to 1Q22, and the Adjusted Gross Profit margin was 35.1%, in line with 1Q22.
In 1Q23, selling, general and administrative (SG&A), and other operating expenses were R$116.5 million, 15.8% higher when compared to 1Q22, mainly attributed to an increase in personnel expenses, and higher amortization of intangible assets from the acquired Companies. As a percentage of revenue, SG&A and other expenses decreased to 19.1% in 1Q23 from 20.4% in 1Q22, as planned, since SG&A are mainly fixed expenses.
Depreciation and amortization expenses totaled R$25.1 million in 1Q23, 29.2% higher than in 1Q22, as a result of an increase in the amortization of intangible assets from acquired companies, from R$7.6 million in 1Q22 to R$12.7 million in 1Q23.
In 1Q23, the Adjusted EBITDA was R$116.5 million, 37.9% higher compared to 1Q22. Adjusted EBITDA margin was 19.1% in the quarter, an increase of 1.9 percentage points compared to 1Q22, mainly due to the dilution of SG&A expenses.
In 1Q23, net financial expenses were R$20.0 million, 19.5% higher than 1Q22, mainly driven by a higher debt position, an increase in interest rates, and a negative foreign exchange (FX) variation in the period. In 1Q23, the reported net FX loss was R$2.2 million, while in 1Q22 it was a net FX gain of R$ 1.3 million. In 1Q23, income tax expense was R$11.7 million, a reduction of 23.4% in relation to 1Q22.
The net profit was R$52.4 million in 1Q23, 79.2% higher than in 1Q22. Adjusted Net Profit was R$67.2 million, an increase of 70% over 1Q22. The Adjusted Net Profit margin increased 3 percentage points, from 8.0% in 1Q22 to 11.0% in 1Q23, mainly as a result of a reduction in SG&A expenses as a percentage of revenue and lower income tax expense.
Business Outlook
We expect our net revenue in the second quarter of 2023 to be at least R$570 million compared to net revenue of R$525 million in the second quarter of 2022, a 9% growth on a reported basis.
For the full year of 2023, we are maintaining our net revenue growth in the range of 13% to 17% year-over-year, assuming a constant currency outlook. In addition, we estimate our Adjusted EBITDA margin to be at least 19% for the full year of 2023.
In addition, we estimate our Adjusted EBITDA margin to be at least 19% for the full year of 2023.
These expectations are forward-looking statements and actual results may differ materially. See "Cautionary Statement on Forward-Looking Statements" below.
Share Repurchase Program
On May 17, 2023, the Board of Directors approved a share repurchase program, pursuant to which CI&T may repurchase up to 1.5 million of its outstanding class A common shares in the next 12 months. The program was approved taking into consideration the Company's commitments to deliver shares under its stock-based compensation plan and M&A transactions.
Conference Call Information
Cesar Gon, Bruno Guicardi, Stanley Rodrigues, and Eduardo Galvão will host a video conference call to discuss the 1Q23 financial and operating results on May 19, at 8:00 a.m. Eastern Time / 9:00 a.m. BRT. The earnings call can be accessed at the Company’s Investor Relations website at https://investors.ciandt.com or at the following link: https://youtube.com/live/u-QkX4MFGjA?feature=share
About CI&T
CI&T (NYSE:CINT) is a global digital specialist, a partner in AI powered digital transformation and efficiency for 100+ large enterprises and fast growth clients. As digital natives, CI&T brings a 28-year track record of accelerating business impact through complete and scalable digital solutions. With a global presence in nine countries with a nearshore delivery model, CI&T provides strategy, data science, design, and engineering, unlocking top-line growth, improving customer experience and driving operational efficiency. Recognized by Forrester as a Leader in Modern Application Development Services, CI&T is the Employer of Choice for more than 6,500 professionals.
Basis of accounting and functional currency
CI&T maintains its books and records in Brazilian reais, the presentation currency for its unaudited condensed consolidated interim financial statements, and the functional currency of our operations in Brazil. CI&T prepares its unaudited condensed consolidated interim financial statements in accordance with IFRS, as issued by the IASB, and International Financial Reporting Standard No 34—Interim Financial Reporting (“IAS 34”).
Non-IFRS Financial Measures
We regularly monitor certain financial and operating metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions. These non-IFRS financial measures include Adjusted Gross Profit, Adjusted Gross Profit Margin, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Profit, Adjusted Net Profit Margin, Net Revenue at Constant Currency, and Net Revenue Growth at Constant Currency, and should be considered in addition to results prepared in accordance with IFRS, but not as substitutes for IFRS results. In addition, our calculation of these non-IFRS financial measures may differ from those used by other companies, and therefore comparability may be limited. These non-IFRS financial measures are provided as additional information to enhance investors’ overall understanding of our operations’ historical and current financial performance.
CI&T is not providing a quantitative reconciliation of forward-looking Non-IFRS Net Revenue Growth at Constant Currency and Adjusted EBITDA to the most directly comparable IFRS measure because it is unable to reasonably predict the ultimate outcome of certain significant items without unreasonable efforts. These items include but are not limited to, stock-based compensation expenses, acquisition-related expenses, the tax effect of non-IFRS adjustments, foreign currency exchange (gains)/losses, and other items. These items are uncertain, depend on various factors, and could have a material impact on IFRS-reported results for the guidance period.
We calculate Net Revenue at Constant Currency and Net Revenue Growth at Constant Currency by translating Net Revenue from entities reporting in foreign currencies into Brazilian reais using the comparable foreign currency exchange average rates from the prior period to show changes in our revenue without giving effect to period-to-period currency fluctuations. In calculating Adjusted Gross Profit, we exclude cost components unrelated to the direct management of our services. For the periods herein, the adjustments applied were: (i) depreciation and amortization related to costs of services provided; and (ii) stock-based compensation expenses.
In calculating Adjusted EBITDA, we exclude components unrelated to the direct management of our services. For the periods herein, the adjustments were: (i) stock-based compensation expenses; (ii) government grants related to tax reimbursement in the Chinese subsidiary; and (iii) acquisition-related expenses, including present value adjustment on accounts payable for business combination, consulting expenses, and retention packages.
In calculating Adjusted Net Profit, we exclude components unrelated to the direct management of our services. For the periods herein, the adjustments applied were acquisition-related expenses, including amortization of intangible assets from acquired companies, present value adjustment on accounts payable for business combination, consulting expenses, and retention packages.
Cautionary Statement on Forward-Looking Statements
This press release includes "forward-looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, which include but are not limited to: the statements under "Business outlook," including expectations relating to revenues and other financial or business metrics; statements regarding relationships with clients; and any other statements of expectation or belief. The words “believe,” “will,” “may,” “may have,” “would,” “estimate,” “continues,” “anticipates,” “intends,” “plans,” “expects,” “budget,” "scheduled,” “forecasts” and similar words are intended to identify estimates and forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements represent our management's beliefs and assumptions only as of the date of this press release. You should read this press release with the understanding that our actual future results may be materially different from what we expect. These statements are subject to known and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance, or achievements to differ materially from results expressed or implied in this press release. Such risk factors include, but are not limited to, those related to: the current and future impact of the COVID-19 pandemic, the ongoing war in Ukraine and economic sanctions imposed by Western economies over Russia on our business and industry; the effects of competition on our business; uncertainty regarding the demand for and market utilization of our services; the ability to maintain or acquire new client relationships; general business and economic conditions; our ability to successfully integrate the recent-acquired companies; and our ability to successfully execute our growth strategy and strategic plans. Additional information concerning these and other risks and uncertainties are contained in the "Risk Factors" section of CI&T's annual report on Form 20-F. Additional information will be made available in our annual reports on Form 20-F, and other filings and reports that CI&T may file from time to time with the SEC. Except as required by law, CI&T assumes no obligation and does not intend to update these forward-looking statements or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.
Contacts:
Investor Relations Contact:
Eduardo Galvão
investors@ciandt.com
Media Relations Contact:
Zella Panossian
ciandt@illumepr
Unaudited condensed consolidated statement of profit or loss
(In thousands of Brazilian Reais)
|
|
March 31, 2023 |
|
March 31, 2022 |
|
|
|
|
|
|
Net Revenue |
609,991 |
|
491,872 |
|
Costs of services provided |
(407,861) |
|
(328,992) |
|
Gross Profit |
202,130 |
|
162,880 |
|
|
|
|
|
|
Selling expenses |
(45,554) |
|
(35,129) |
|
General and administrative expenses |
(71,222) |
|
(64,921) |
|
Impairment loss on trade receivables and contract assets |
(1,605) |
|
(1,066) |
|
Other income (expenses) net |
324 |
|
(515) |
|
Operating expenses net |
(118,057) |
|
(101,631) |
|
|
|
|
|
|
Operating profit before financial income and tax |
84,073 |
|
61,249 |
|
|
|
|
|
|
Finance income |
20,664 |
|
69,582 |
|
Finance cost |
(40,632) |
|
(86,294) |
|
Net finance costs |
(19,968) |
|
(16,712) |
|
|
|
|
|
|
Profit before Income tax |
64,105 |
|
44,537 |
|
|
|
|
|
|
Current |
(14,780) |
|
(5,408) |
|
Deferred |
3,057 |
|
(9,906) |
|
Total Income tax expense |
(11,723) |
|
(15,314) |
|
|
|
|
|
|
Net profit for the period |
52,382 |
|
29,223 |
|
|
|
|
|
|
Earnings per share |
|
|
|
|
Earnings per share – basic (in R$) |
0.39 |
|
0.22 |
|
Earnings per share – diluted (in R$) |
0.38 |
|
0.22 |
| 5 |
Unaudited condensed consolidated statements of financial position
(In thousands of Brazilian Reais)
|
Assets |
March 31, 2023 |
|
December 31, 2022 |
|
Liabilities and equity |
March 31, 2023 |
|
December 31, 2022 |
|
Cash and cash equivalents |
251,550 |
|
185,727 |
|
Suppliers and other payables |
21,542 |
|
33,376 |
|
Financial Investments |
93,884 |
|
96,299 |
|
Loans and borrowings |
233,583 |
|
231,296 |
|
Trade receivables |
445,455 |
|
501,671 |
|
Lease liabilities |
19,922 |
|
21,539 |
|
Contract assets |
232,459 |
|
217,250 |
|
Salaries and welfare charges |
251,801 |
|
260,156 |
|
Recoverable taxes |
15,051 |
|
7,619 |
|
Accounts payable for business combination |
72,005 |
|
71,650 |
|
Tax assets |
1,256 |
|
2,959 |
|
Derivatives - hedge accounting |
40,052 |
|
35,169 |
|
Derivatives - hedge accounting |
30,698 |
|
19,637 |
|
Derivatives |
450 |
|
4,109 |
|
Derivatives |
9,240 |
|
11,194 |
|
Tax liabilities |
8,246 |
|
3,890 |
|
Other assets |
31,856 |
|
38,269 |
|
Other taxes payable |
13,040 |
|
14,382 |
|
Total current assets |
1,111,449 |
|
1,080,625 |
|
Contract liability |
20,491 |
|
32,136 |
|
|
|
|
|
|
Other liabilities |
50,745 |
|
47,501 |
|
Recoverable taxes |
3,644 |
|
3,624 |
|
Total current liabilities |
731,877 |
|
755,204 |
|
Deferred tax assets |
37,848 |
|
35,138 |
|
|
|
|
|
|
Judicial deposits |
9,710 |
|
9,819 |
|
Loans and borrowings |
714,741 |
|
742,935 |
|
Restricted cash - Escrow account and indemnity asset |
30,459 |
|
31,552 |
|
Lease liabilities |
37,036 |
|
41,269 |
|
Other assets |
3,637 |
|
3,654 |
|
Provisions |
12,074 |
|
12,347 |
|
Property, plant and equipment |
52,032 |
|
55,266 |
|
Accounts payable for business combination |
132,681 |
|
133,299 |
|
Intangible assets and goodwill |
1,719,226 |
|
1,750,898 |
|
Other liabilities |
2,929 |
|
3,530 |
|
Right-of-use assets |
50,402 |
|
56,187 |
|
Total non-current liabilities |
899,461 |
|
933,380 |
|
Total non-current assets |
1,906,958 |
|
1,946,138 |
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
|
|
Share capital |
37 |
|
37 |
|
|
|
|
|
|
Share premium |
946,173 |
|
946,173 |
|
|
|
|
|
|
Capital reserves |
209,093 |
|
203,218 |
|
|
|
|
|
|
Profit reserves |
304,255 |
|
251,873 |
|
|
|
|
|
|
Other comprehensive income |
(72,489) |
|
(63,122) |
|
|
|
|
|
|
Total equity |
1,387,069 |
|
1,338,179 |
|
Total assets |
3,018,407 |
|
3,026,763 |
|
Total equity and liabilities |
3,018,407 |
|
3,026,763 |
| 6 |
Unaudited condensed consolidated statement of cash flows
(In thousands of Brazilian Reais)
|
|
March 31, 2023 |
|
March 31, 2022 |
|
Cash flows from operating activities |
|
|
|
|
Net profit for the period |
52,382 |
|
29,223 |
|
Adjustments for: |
|
|
|
|
Depreciation and amortization |
25,053 |
|
19,390 |
|
Gain/loss on the sale of property, plant and equipment and intangible assets |
(95) |
|
1,926 |
|
Interest, monetary variation and exchange rate changes |
22,085 |
|
4,488 |
|
Interest and exchange variation on accounts payable for business combinations |
1,445 |
|
(11,628) |
|
Exchange variation on escrow account related to Somo acquisition |
67 |
|
3,123 |
|
Interest on lease |
1,179 |
|
2,146 |
|
Unrealized gain on financial instruments |
(4,544) |
|
(4,487) |
|
Income tax expenses |
11,723 |
|
15,314 |
|
Reversal of impairment losses on trade receivables |
(89) |
|
(1,194) |
|
Impairment losses on contract assets |
1,694 |
|
1,064 |
|
Provision for labor risks |
(273) |
|
571 |
|
Stock-based plan |
5,393 |
|
1,239 |
|
Income on financial investments |
(193) |
|
- |
|
Present value adjustment - accounts payable for business combination |
1,589 |
|
- |
|
Others |
41 |
|
- |
|
Variation in operating assets and liabilities |
|
|
|
|
Trade receivables |
49,460 |
|
21,293 |
|
Contract assets |
(18,900) |
|
(78,979) |
|
Recoverable taxes |
245 |
|
(3,330) |
|
Tax assets |
(11,281) |
|
(15,242) |
|
Judicial deposits |
110 |
|
(3,022) |
|
Suppliers and other payables |
(11,672) |
|
(31,279) |
|
Salaries and welfare charges |
(7,628) |
|
15,553 |
|
Tax liabilities |
- |
|
(901) |
|
Other taxes payable |
633 |
|
(682) |
|
Contract liabilities |
(12,657) |
|
(2,021) |
|
Other receivables and payables, net |
10,795 |
|
(9,529) |
|
Cash generated from (used in) operating activities |
116,562 |
|
(46,964) |
|
Income tax paid |
(6,808) |
|
(4,818) |
|
Interest paid on loans and borrowings |
(15,534) |
|
(19,458) |
|
Interest paid on lease |
(1,148) |
|
(1,479) |
|
Net cash from (used in) operating activities |
93,072 |
|
(72,719) |
|
Cash flows from investment activities: |
|
|
|
|
Acquisition of property, plant and equipment and intangible assets |
(4,247) |
|
(8,295) |
|
Acquisition of subsidiary net of cash acquired - Somo |
- |
|
(265,137) |
|
Cash outflow on hedge accounting settlement |
- |
|
16,134 |
|
Redemption of financial investments |
1,474 |
|
350,128 |
|
Net cash from (used in) investment activities |
(2,773) |
|
92,830 |
|
Cash flows from financing activities: |
|
|
|
|
Exercised stock options |
478 |
|
5,128 |
|
Payment of lease liabilities |
(5,919) |
|
(6,084) |
|
Settlement of derivatives |
2,839 |
|
(381) |
|
Payment of loans and borrowings |
(19,432) |
|
(38,506) |
|
Payment of investment obligations - Somo |
(1,235) |
|
- |
|
Net cash used in financing activities |
(23,269) |
|
(39,843) |
|
Net increase/(decrease) in cash and cash equivalents |
67,030 |
|
(19,732) |
|
Cash and cash equivalents as of January 1st |
185,727 |
|
135,727 |
|
Exchange variation effect on cash and cash equivalents |
(1,207) |
|
15,832 |
|
Cash and cash equivalents as of March 31 |
251,550 |
|
131,827 |
| 7 |
Reconciliation of Non-IFRS financial measures to comparable IFRS financial measures
Reconciliation of revenue growth as reported on an IFRS basis to revenue growth on a constant currency basis:
|
Net Revenue (in BRL thousand) |
1Q23 |
1Q22 |
Var. 1Q23 x 1Q22 |
||
|
Net Revenue |
609,991 |
491,872 |
24.0% |
||
|
Net Revenue at Constant Currency |
621,193 |
499,617 |
24.3% |
In 1Q22, net revenue was R$491.9 million, an increase of 66.0% compared to 1Q21. The acquisition of Somo concluded on January 27, 2022 contributed to 10 percentage points of revenue growth in the quarter. Net revenue in constant currency grew
As of this quarter, we present an enhanced classification of our revenue by industry verticals, encompassing more comprehensive and representative industry categories that better align with our evolving business trends.
|
Net Revenue by industry (in BRL thousand) |
1Q23 |
1Q22 |
Var. 1Q23 x 1Q22 |
||
|
Financial Services |
174,783 |
156,326 |
11.8% |
||
|
Consumer goods |
116,156 |
104,369 |
11.3% |
||
|
Technology and telecommunications |
125,060 |
68,056 |
83.8% |
||
|
Retail and industrial goods |
75,814 |
73,222 |
3.5% |
||
|
Life sciences |
63,281 |
62,893 |
0.6% |
||
|
Others |
54,897 |
27,006 |
103.3% |
||
|
Total |
609,992 |
491,872 |
24.0% |
|
Net Revenue by geography (in BRL thousand) |
1Q23 |
1Q22 |
Var. 1Q23 x 1Q22 |
||
|
North America |
263,386 |
203,940 |
29.1% |
||
|
Europe |
73,726 |
37,589 |
96.1% |
||
|
LATAM (Latin America) |
240,616 |
234,706 |
2.5% |
||
|
APJ (Asia, Pacific and Japan) |
32,263 |
15,637 |
106.3% |
||
|
Total |
609,991 |
491,872 |
24.0% |
|
Reconciliation of various income statement amounts from IFRS to non-IFRS measures for the three months ended March 31, 2023 and 2022: |
|
Gross Profit (in BRL thousand) |
1Q23 |
1Q22 |
Var. 1Q23 x 1Q22 |
||
|
Net Revenue |
609,991 |
491,872 |
24.0% |
||
|
Cost of Services |
(407,861) |
(328,992) |
24.0% |
||
|
Gross Profit |
202,130 |
162,880 |
24.1% |
||
|
Adjustments |
|
|
|
||
|
Depreciation and amortization (cost of services provided) |
9,410 |
9,318 |
1.0% |
||
|
Stock-based compensation |
2,376 |
1,182 |
101.0% |
||
|
Adjusted Gross Profit |
213,916 |
173,380 |
23.4% |
||
|
Adjusted Gross Profit Margin |
35.1% |
35.2% |
-0.2p.p |
| 8 |
|
Adjusted EBITDA (in BRL thousand) |
1Q23 |
1Q22 |
Var. 1Q23 x 1Q22 |
||
|
Net profit for the period |
52,382 |
29,223 |
79.2% |
||
|
Adjustments |
|
|
|
||
|
Net financial cost |
19,968 |
16,712 |
19.5% |
||
|
Income tax expense |
11,723 |
15,314 |
-23.4% |
||
|
Depreciation and amortization |
25,053 |
19,390 |
29.2% |
||
|
Stock-based compensation |
5,393 |
1,239 |
335.3% |
||
|
Government grants |
(140) |
(58) |
140.5% |
||
|
Acquisition-related expenses (1) |
2,124 |
2,695 |
-21.2% |
||
|
Adjusted EBITDA |
116,504 |
84,515 |
37.9% |
||
|
Adjusted EBITDA Margin |
19.1% |
17.2% |
1.9p.p |
(1)Includes present value adjustment on accounts payable for business combination, consulting expenses and retention packages.
|
Net Profit (in BRL thousand) |
1Q23 |
1Q22 |
Var. 1Q23 x 1Q22 |
||
|
Net profit for the period |
52,382 |
29,223 |
79.2% |
||
|
Adjustments |
|
|
|
||
|
Acquisition-related expenses (1) |
14,836 |
10,323 |
43.7% |
||
|
Adjusted Net Profit (2) |
67,218 |
39,546 |
70.0% |
||
|
Adjusted Net Profit Margin (2) |
11.0% |
8.0% |
3p.p |
(1)Includes amortization of intangible assets from acquired companies, present value adjustment on accounts payable for business combination, consulting expenses and retention packages.
(2)Adjustments' amounts are gross of tax. Tax effects on non-IFRS adjustments totaled (R$67) in 1Q23 and (R$24) in 1Q22.
CI&T
Inc.
interim financial statements
March 31, 2023
CI&T Inc.
as of March 31, 2023 and December 31, 2022
(In thousands of Brazilian Reais - R$)
|
Assets |
Note |
March 31, 2023 |
|
December 31, 2022 |
|
Liabilities and equity |
Note |
March 31, 2023 |
|
December 31, 2022 |
||
|
Cash and cash equivalents |
7.1 |
251,550 |
|
185,727 |
|
Suppliers and other payables |
|
21,542 |
|
33,376 |
||
|
Financial investments |
7.2 |
93,884 |
|
96,299 |
|
Loans and borrowings |
13 |
233,583 |
|
231,296 |
||
|
Trade receivables |
8 |
445,455 |
|
501,671 |
|
Lease liabilities |
12.b |
19,922 |
|
21,539 |
||
|
Contract assets |
20 |
232,459 |
|
217,250 |
|
Salaries and welfare charges |
14 |
251,801 |
|
260,156 |
||
|
Recoverable taxes |
|
15,051 |
|
7,619 |
|
Accounts payable for business combination |
15 |
72,005 |
|
71,650 |
||
|
Tax assets |
|
1,256 |
|
2,959 |
|
Derivatives - hedge accounting |
25.2 |
40,052 |
|
35,169 |
||
|
Derivatives - hedge accounting |
25.2 |
30,698 |
|
19,637 |
|
Derivatives |
|
450 |
|
4,109 |
||
|
Derivatives |
25.3 |
9,240 |
|
11,194 |
|
Tax liabilities |
|
8,246 |
|
3,890 |
||
|
Other assets |
9 |
31,856 |
|
38,269 |
|
Other taxes payable |
|
13,040 |
|
14,382 |
||
|
|
|
|
|
|
|
Contract liability |
|
20,491 |
|
32,136 |
||
|
Total current assets |
|
1,111,449 |
|
1,080,625 |
|
Other liabilities |
|
50,745 |
|
47,501 |
||
|
|
|
|
|
|
|
Total current liabilities |
|
731,877 |
|
755,204 |
||
|
Recoverable taxes |
|
3,644 |
|
3,624 |
|
|
|
|
|
|
||
|
Deferred tax assets |
|
37,848 |
|
35,138 |
|
Loans and borrowings |
13 |
714,741 |
|
742,935 |
||
|
Judicial deposits |
16 |
9,710 |
|
9,819 |
|
Lease liabilities |
12.b |
37,036 |
|
41,269 |
||
|
Restricted cash - Escrow account and indemnity asset |
2/15 |
30,459 |
|
31,552 |
|
Provisions |
16 |
12,074 |
|
12,347 |
||
|
Other assets |
9 |
3,637 |
|
3,654 |
|
Accounts payable for business combination |
15 |
132,681 |
|
133,299 |
||
|
Property, plant and equipment |
10 |
52,032 |
|
55,266 |
|
Other liabilities |
|
2,929 |
|
3,530 |
||
|
Intangible assets and goodwill |
11 |
1,719,226 |
|
1,750,898 |
|
|
|
|
|
|
||
|
Right-of-use assets |
12.a |
50,402 |
|
56,187 |
|
Total non-current liabilities |
|
899,461 |
|
933,380 |
||
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Total non-current assets |
|
1,906,958 |
|
1,946,138 |
|
Equity |
19 |
|
|
|
||
|
|
|
|
|
|
|
Share capital |
|
37 |
|
37 |
||
|
|
|
|
|
|
|
Share premium |
|
946,173 |
|
946,173 |
||
|
|
|
|
|
|
|
Capital reserves |
|
209,093 |
|
203,218 |
||
|
|
|
|
|
|
|
Profit reserves |
|
304,255 |
|
251,873 |
||
|
|
|
|
|
|
|
Other comprehensive income |
|
(72,489) |
|
(63,122) |
||
|
|
|
|
|
|
|
Total equity |
|
1,387,069 |
|
1,338,179 |
||
|
Total assets |
|
3,018,407 |
|
3,026,763 |
|
Total equity and liabilities |
|
3,018,407 |
|
3,026,763 |
The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.
CI&T Inc.
For the three-month period ended on March 31, 2023 and 2022
(In thousands of Brazilian Reais – R$)
|
|
Note |
March 31, 2023 |
|
March 31, 20222 |
|
|
Net revenue |
20 |
609,991 |
|
491,872 |
|
|
Costs of services provided |
21 |
(407,861) |
|
(328,992) |
|
|
Gross profit |
|
202,130 |
|
162,880 |
|
|
Selling expenses |
21 |
(45,554) |
|
(35,129) |
|
|
General and administrative expenses |
21 |
(71,222) |
|
(64,921) |
|
|
Impairment loss on trade receivables and contract assets |
21 |
(1,605) |
|
(1,066) |
|
|
Other income (expenses) net |
21 |
324 |
|
(515) |
|
|
Operating expenses net |
|
(118,057) |
|
(101,631) |
|
|
Operating profit before financial income and tax |
|
84,073 |
|
61,249 |
|
|
Finance income |
22 |
20,664 |
|
69,582 |
|
|
Finance cost |
22 |
(40,632) |
|
(86,294) |
|
|
Net finance costs |
|
(19,968) |
|
(16,712) |
|
|
Profit before income tax |
|
64,105 |
|
44,537 |
|
|
Current |
|
(14,780) |
|
(5,408) |
|
|
Deferred |
|
3,057 |
|
(9,906) |
|
|
Total income tax expense |
|
(11,723) |
|
(15,314) |
|
|
Net profit for the period |
|
52,382 |
|
29,223 |
|
|
Earnings per share |
|
|
|
|
|
|
Earnings per share – basic (in R$) |
24 |
0.39 |
|
0.22 |
|
|
Earnings per share – diluted (in R$) |
24 |
0.38 |
|
0.22 |
The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.
CI&T Inc.
For the three-month period ended on March 31, 2023 and 2022
(In thousands of Brazilian Reais – R$)
|
|
Note |
March 31, 2023 |
|
March 31, 2022 |
|
|
Net profit for the period |
|
52,382 |
|
29,223 |
|
|
Other comprehensive income (OCI): |
|
|
|
|
|
|
Item that are or may be reclassified subsequently to profit or loss |
|
|
|
|
|
|
Exchange variation in foreign investments |
19.d |
(15,545) |
|
(93,375) |
|
|
Cash flow hedges - effective portion of changes in fair value |
25 |
6,178 |
|
(35,724) |
|
|
Total comprehensive income (loss) for the period |
|
43,015 |
|
(99,876) |
|
|
Total comprehensive income (loss) attributed to |
|
|
|
|
|
|
Owners of the Company |
|
43,015 |
|
(99,876) |
|
|
Total comprehensive income (loss) for the period |
|
43,015 |
|
(99,876) |
The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.
CI&T Inc.
For the three-month period ended on March 31, 2023 and 2022
(In thousands of Brazilian Reais – R$)
|
|
|
|
|
|
|
|
|
Profit reserves |
|
|
|
|
|
|
|
|
Notes |
Share capital |
|
Share premium |
|
Capital reserve |
|
Retained earnings reserve |
|
Retained earnings |
|
Other comprehensive income |
|
Total equity |
|
Balances as of December 31, 2021 |
|
36 |
|
915,947 |
|
10,105 |
|
125,957 |
|
- |
|
37,250 |
|
1,089,295 |
|
Net profit for the period |
|
- |
|
- |
|
- |
|
- |
|
29,223 |
|
- |
|
29,223 |
|
Exchange variation in foreign investments |
19.f |
- |
|
- |
|
- |
|
- |
|
- |
|
(93,375) |
|
(93,375) |
|
Cash flow hedges - effective portion of changes in fair value |
25.2.a1 |
- |
|
- |
|
- |
|
- |
|
- |
|
(35,724) |
|
(35,724) |
|
Total comprehensive income for the year |
|
- |
|
- |
|
- |
|
- |
|
29,223 |
|
(129,099) |
|
(99,876) |
|
Transactions with the owner of the Group |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributions, distribution and constitution of reserves |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issues to ordinary shares related to business combinations (Somo) |
19.b |
- |
|
14,037 |
|
- |
|
- |
|
- |
|
- |
|
14,037 |
|
Equity settled stock-based compensation |
18.d |
- |
|
- |
|
144 |
|
- |
|
- |
|
- |
|
144 |
|
Shares exercised by executive officers |
|
1 |
|
- |
|
5,128 |
|
- |
|
- |
|
- |
|
5,129 |
|
Total contributions and distribution and constitution of reserves |
|
1 |
|
14,037 |
|
5,272 |
|
- |
|
- |
|
- |
|
19,310 |
|
Balances as of March 31, 2022 |
|
37 |
|
929,984 |
|
15,377 |
|
125,957 |
|
29,223 |
|
(91,849) |
|
1,008,729 |
|
Balances as of December 31, 2022 |
|
37 |
|
946,173 |
|
203,218 |
|
251,873 |
|
- |
|
(63,122) |
|
1,338,179 |
|
Net profit for the period |
|
- |
|
- |
|
- |
|
- |
|
52,382 |
|
- |
|
52,382 |
|
Exchange variation in foreign investments |
19.f |
- |
|
- |
|
- |
|
- |
|
- |
|
(15,545) |
|
(15,545) |
|
Cash flow hedges - effective portion of changes in fair value |
25.2.a1 |
- |
|
- |
|
- |
|
- |
|
- |
|
6,178 |
|
6,178 |
|
Total comprehensive income for the year |
|
- |
|
- |
|
- |
|
- |
|
52,382 |
|
(9,367) |
|
43,015 |
|
Transactions with the owner of the Group |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contributions, distribution and constitution of reserves |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity settled stock-based compensation |
18.d |
- |
|
- |
|
631 |
|
- |
|
- |
|
- |
|
631 |
|
Equity settled restricted stock units |
18.d |
- |
|
- |
|
4,285 |
|
- |
|
- |
|
- |
|
4,285 |
|
Equity settled incentive stock options |
18.d |
- |
|
- |
|
10 |
|
- |
|
- |
|
- |
|
10 |
|
Restricted stock units exercised |
18.d |
- |
|
- |
|
471 |
|
- |
|
- |
|
- |
|
471 |
|
Share options exercised |
|
- |
|
- |
|
478 |
|
- |
|
- |
|
- |
|
478 |
|
Total contributions and distribution and constitution of reserves |
|
- |
|
- |
|
5,875 |
|
- |
|
- |
|
- |
|
5,875 |
|
Balances as of March 31, 2023 |
|
37 |
|
946,173 |
|
209,093 |
|
251,873 |
|
52,382 |
|
(72,489) |
|
1,387,069 |
The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.
CI&T Inc.
Unaudited condensed consolidated statement of cash flows
For the three-month period ended on March 31, 2023 and 2022
(In thousands of Brazilian Reais – R$)
|
|
Notes |
March 31, 2023 |
|
March 31, 2022 |
|
|
Cash flows from operating activities |
|
|
|
|
|
|
Net profit for the period |
|
52,382 |
|
29,223 |
|
|
Adjustments for: |
|
|
|
|
|
|
Depreciation and amortization |
10, 11, 12 |
25,053 |
|
19,390 |
|
|
Gain/loss on the sale of property, plant and equipment and intangible assets |
10, 11, 12 |
(95) |
|
1,926 |
|
|
Interest, monetary variation and exchange rate changes |
|
22,085 |
|
4,488 |
|
|
Interest and exchange variation on accounts payable for business combinations |
15 |
1,445 |
|
(11,628) |
|
|
Exchange variation on escrow account related to Somo acquisition |
|
67 |
|
3,123 |
|
|
Interest on lease |
13 |
1,179 |
|
2,146 |
|
|
Unrealized (gain on financial instruments |
|
(4,544) |
|
(4,487) |
|
|
Income tax expenses |
|
11,723 |
|
15,314 |
|
|
Reversal of impairment losses on trade receivables |
8 |
(89) |
|
(1,194) |
|
|
Impairment losses on contract assets |
20 |
1,694 |
|
1,064 |
|
|
Provision for labor risks |
16 |
(273) |
|
571 |
|
|
Stock-based plan |
18.d |
5,393 |
|
1,239 |
|
|
Income on financial investments |
7.2 |
(193) |
|
- |
|
|
Present value adjustment - accounts payable for business combination |
15 |
1,589 |
|
- |
|
|
Others |
|
41 |
|
- |
|
|
Variation in operating assets and liabilities |
|
|
|
|
|
|
Trade receivables |
|
49,460 |
|
21,293 |
|
|
Contract assets |
|
(18,900) |
|
(78,979) |
|
|
Recoverable taxes |
|
245 |
|
(3,330) |
|
|
Tax assets |
|
(11,281) |
|
(15,242) |
|
|
Judicial deposits |
|
110 |
|
(3,022) |
|
|
Suppliers and other payables |
|
(11,672) |
|
(31,279) |
|
|
Salaries and welfare charges |
|
(7,628) |
|
15,553 |
|
|
Tax liabilities |
|
- |
|
(901) |
|
|
Other taxes payable |
|
633 |
|
(682) |
|
|
Contract liabilities |
|
(12,657) |
|
(2,021) |
|
|
Other receivables and payables, net |
|
10,795 |
|
(9,529) |
|
|
Cash generated from (used in) operating activities |
|
116,562 |
|
(46,964) |
|
|
Income tax paid |
|
(6,808) |
|
(4,818) |
|
|
Interest paid on loans and borrowings |
13 |
(15,534) |
|
(19,458) |
|
|
Interest paid on lease |
13 |
(1,148) |
|
(1,479) |
|
|
Net cash from (used in) operating activities |
|
93,072 |
|
(72,719) |
|
|
Cash flows from investment activities |
|
|
|
|
|
|
Acquisition of property, plant and equipment and intangible assets |
10, 11 |
(4,247) |
|
(8,295) |
|
|
Acquisition of subsidiary net of cash acquired - Somo |
|
- |
|
(265,137) |
|
|
Cash outflow on hedge accounting settlement |
25.2.a1 |
- |
|
16,134 |
|
|
Redemption of financial investments |
7.2 |
1,474 |
|
350,128 |
|
|
Net cash from (used in) investment activities |
|
(2,773) |
|
92,830 |
|
|
Cash flows from financing activities |
|
|
|
|
|
|
Exercised stock options |
|
478 |
|
5,128 |
|
|
Payment of lease liabilities |
13 |
(5,919) |
|
(6,084) |
|
|
Settlement of derivatives |
13 |
2,839 |
|
(381) |
|
|
Payment of loans and borrowings |
13 |
(19,432) |
|
(38,506) |
|
|
Payment of investment obligations - Somo |
15 |
(1,235) |
|
- |
|
|
Net cash used in financing activities |
|
(23,269) |
|
(39,843) |
|
|
Net increase/(decrease) in cash and cash equivalents |
|
67,030 |
|
(19,732) |
|
|
Cash and cash equivalents as of January 1st |
|
185,727 |
|
135,727 |
|
|
Exchange variation effect on cash and cash equivalents |
|
(1,207) |
|
15,832 |
|
|
Cash and cash equivalents as of March 31 |
|
251,550 |
|
131,827 |
The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.
CI&T Inc.
Unaudited condensed consolidated interim financial statements
March 31, 2023
(Amounts in thousands of Brazilian Reais – R$, unless otherwise stated)
1 Reporting Entity
CI&T Inc. (“CI&T” and/or “Company”), is a publicly held company incorporated in the Cayman Islands in June 2021, headquartered at Estrada Giuseppina Vianelli Di Napoli, 1455, Polo II de Alta Tecnologia, in the City of Campinas, State of São Paulo, Brazil. As a holding company, it is mainly engaged in the investment, as a partner or shareholder, in other companies, consortia or joint ventures in Brazil and other countries. The Company’s subsidiaries are mainly engaged in the development of customizable software through implementation of software solutions, including machine learning, artificial intelligence (AI), analytics, cloud migration and mobility technologies.
These unaudited condensed consolidated interim financial statements comprise the Company and its subsidiaries (collectively referred to as the “Group”).
2 Business combination
During 2022, the Company acquired several businesses for which we engaged independent valuation experts to assist in determining the fair value of the assets acquired and liabilities assumed and related deferred income tax impacts.
The summary of the prior period acquisitions on each acquisition date is as follows:
|
|
Somo |
Box 1824 |
Transpire |
Ntersol |
|||
|
Acquisition/closing date |
January 27, 2022 |
June 1, 2022 |
September 1, 2022 |
November 1, 2022 |
|||
|
Cash |
340,777 |
20,768 |
60,392 |
418,007 |
|||
|
Restricted cash in escrow account |
23,061 |
- |
- |
- |
|||
|
Earn-out |
59,868 |
- |
- |
- |
|||
|
Accounts payable for business combination |
- |
- |
- |
- |
|||
|
Contingent consideration - Retained amount |
9,671 |
8,871 |
- |
75,096 |
|||
|
Class A common shares issued |
14,037 |
- |
16,189 |
- |
|||
|
Stock-based payment – vested immediately (i) |
- |
4,124 |
- |
170,774 |
|||
|
Other |
- |
974 |
- |
- |
|||
|
Price Adjustment |
- |
(558) |
729 |
775 |
|||
|
Total consideration transferred at the acquisition date |
447,414 |
34.179 |
77,310 |
664,652 |
|||
|
Total identifiable net assets acquired |
(130,235) |
(12,654) |
(8,115) |
(201,496) |
|||
|
Goodwill (note 11) |
317,179 |
21,525 |
69,195 |
463,156 |
| (i) | Refers to the purchase price to be paid in common shares in connection with business combination, but considered as vested immediately at each acquisition date, and the amount was measured at fair value on the same date. |
CI&T Inc.
Unaudited condensed consolidated interim financial statements
March 31, 2023
3 Basis of accounting
These unaudited condensed consolidated interim financial statements for the three-month period ended March 31, 2023 have been prepared in accordance with IAS 34 – Interim Financial Reporting and should be read in conjunction with the Group’s last annual consolidated financial statements as at and for the year ended December 31, 2022. This financial information does not include all the information required for a complete set of financial statements prepared in accordance with IFRS Standards. However, selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group’s financial position and performance since the last annual financial statements.
The issuance of these unaudited condensed consolidated interim financial information was authorized by the Company’s Management and Audit Committee on May 17, 2023.
4 Functional and presentation currency
These unaudited condensed consolidated interim financial statements are presented in Brazilian Reais (“R$”), which is the Company's functional currency. All balances are rounded to the nearest thousands, except when otherwise indicated.
The main exchange rates used in the preparation of the Company's financial statements are Brazilian Reais, US dollar (“US$”), Yen, Euro, Australian dollar (“AU$”), Pound sterling (“£”), and Colombian peso as the Company’s subsidiaries have their functional currencies.
5 Use of judgments and estimates
In preparing these unaudited condensed consolidated interim financial statements, Management has made judgments and estimates that affect the application of the Company's accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. The revisions to estimates are recognized prospectively.
a. Judgments
Information about judgments made in the application of accounting policies that have significant effects on the amounts recognized in the financial statements are included in the following notes:
| ● | Note – 12.b - lease term: whether the Group is reasonably certain to exercise extension options; |
| ● |
Note – 20 - revenue recognition: whether service revenue is recognized over time or at point in time. |
CI&T Inc.
Unaudited condensed consolidated interim financial statements
March 31, 2023
b. Assumptions and estimation uncertainties
Information about assumptions and estimation uncertainties at the reporting date that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities in the next fiscal year is included in the following note:
| ● |
Note 1 – acquisition of subsidiaries: fair value of the consideration transferred, fair value of identifiable intangibles. |
c. Measurement of fair values
A number of the Group’s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities.
The Group has established a control framework with respect to the measurement of fair value. This includes the review of significant fair value measurements, significant unobservable data and valuation adjustments. If third-party information, such as broker quotes or pricing services, is used to measure fair values, the valuation team assesses the evidence obtained from third parties to support the conclusion that such valuations meet the requirements of the Accounting Standards, including the level in the fair value hierarchy in which the valuations should be classified.
When measuring the fair value of an asset or a liability, the Group uses observable market data as much as possible. Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:
| ● |
Level 1: Quoted prices (not adjusted) in active markets for identical assets or liabilities. |
| ● |
Level 2: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). |
| ● |
Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs). |
If the inputs used to measure the fair value of an asset or liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety in the same level of fair value hierarchy as the lowest level input that is significant to the entire measurement.
The Group recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the changes have occurred.
Further information about the assumptions made in measuring fair values is included in the following notes:
| ● |
Note 1 – business combination - acquisition of subsidiaries; |
| ● | Note 18 – stock-based payment transactions; and |
| ● |
Note 25 – financial instruments. |
6 Change in accounting policy
Except as described below, the accounting policies applied in these interim financial statements are the same as those applied in the Group’s consolidated financial statements as at and for the year ended December 31, 2022.
(i) Deferred tax related to assets and liabilities arising from a single transaction
The Group has adopted Deferred tax related to assets and liabilities arising from a single transaction – Amendments to IAS 12 from 1 January 2023. The amendments narrow the scope of the initial recognition exemption to exclude transactions that give rise to equal and offsetting temporary differences – e.g. leases and decommissioning liabilities. For leases and decommissioning liabilities, an entity is required to recognize the associated deferred tax assets and liabilities from the beginning of the earliest comparative period presented, with any cumulative effect recognized as an adjustment to retained earnings or other components of equity at that date. For all transactions, an entity applies the amendments to transactions that occur after the beginning of the earliest period presented.
CI&T Inc.
Unaudited condensed consolidated interim financial statements
March 31, 2023
The Group previously accounted for deferred tax on leases and decommissioning liabilities applying the integrally linked approach, resulting in a similar outcome to the amendments, except that the deferred tax asset or liability was recognized on a net basis. Following the amendments, the Group has recognized a separate deferred tax asset in relation to its lease liabilities and deferred tax liability in relation to its right-of-use assets. However, there was no impact on the statement of financial position because the balances qualify for offset under paragraph 74 of IAS 12. There was also no impact on the opening retained earnings as of 1 January 2022 as a result of the change. As of March 31, 2023, the amount of deferred tax assets is R$ 31,294 (R$ 29,637 as of December 31, 2022) and deferred tax liabilities is R$ 28,673 (R$ 27,025 as of December 31, 2022).
The change in accounting policy will also be reflected in the Group’s consolidated financial statements as at and for the year ending 31 December 2023.
7 Cash and cash equivalents and financial investments
7.1 Cash and cash equivalents
|
. |
March 31, 2023 |
December 31, 2022 |
|
|
Cash and cash equivalents |
154,044 |
127,263 |
|
|
Short-term financial investments |
97,506 |
58,464 |
|
|
Total |
251,550 |
185,727 |
Short-term financial investments are represented by fixed income securities, with interest rates ranging from 101% to 102% on March 31, 2023 (101% to 102% as of December 31, 2022) of the changes of Interbank Deposit Certificate (CDI) variation which (i) Management expects to use for short-term commitments; (ii) present daily liquidity; and (iii) are readily convertible into a known amount of cash, subject to an insignificant risk of change in value.
7.2 Financial investments
|
. |
March 31, 2023 |
December 31, 2022 |
|
|
Financial investments |
93,884 |
96,299 |
The changes in the balances are as follows:
|
Balance as of January 1, 2023 |
96,299 |
|
Effect of movements in exchange rates |
(1,134) |
|
Income on financial investments |
193 |
|
Redemption of financial investments |
(1,474) |
|
Balance as of March 31, 2023 |
93,884 |
|
Balance as of January 1, 2022 |
798,786 |
|
Effect of movements in exchange rates |
(26,922) |
|
Redemption of financial investments |
(350,128) |
|
Hedge accounting realization |
(16,134) |
|
Balance as of March 31, 2022 |
405,602 |
CI&T Inc.
Unaudited condensed consolidated interim financial statements
March 31, 2023
As of March 31, 2023 the balance of R$ 93,884 (US$ 8,582 and £ 8,001) (R$ 96,299 (US$ 18,456) as of December 31, 2022) is allocated between an interest-bearing account and time deposits. Both instruments are in US$ and £, and they bear interest rates ranging from 0.5% to 5.1% p.a. (from 0.57% to 4.2% p.a. on December 31, 2022), and such accounts present immediate liquidity. The Company holds US$ and £ amounts for short-term commitments in the same currencies. A foreign currency exposure arises from these financial investments held in US$ and £, since the amount may be subject to a significant exchange rate variation once translated to R$.
8 Trade receivables
The balances of trade receivables are presented, as follows:
|
|
March 31, 2023 |
December 31, 2022 |
|
|
Trade receivables - Dollar denominated – from US customers |
290,327 |
304,693 |
|
|
Trade receivables - Reais denominated – from Brazilian customers |
94,636 |
133,582 |
|
|
Trade receivables - from other customers |
61,068 |
64,049 |
|
|
(-) Expected credit losses |
(576) |
(653) |
|
|
Trade receivables, net |
445,455 |
501,671 |
The balances of trade receivables by maturity date are as follows:
|
|
March 31, 2023 |
December 31, 2022 |
|||||
|
|
Trade receivables |
(-) Expected credit losses |
Trade receivables |
(-) Expected credit losses |
|||
|
Not due |
412,099 |
(185) |
458,802 |
(146) |
|||
|
Overdue: |
|
|
|
|
|||
|
from 1 to 60 days (i) |
26,790 |
(12) |
36,995 |
(261) |
|||
|
61 to 360 days |
7,021 |
(258) |
6,140 |
(119) |
|||
|
Over 360 days |
121 |
(121) |
387 |
(127) |
|||
|
Total |
446,031 |
(576) |
502,324 |
(653) |
|||
| (i) | As of March 31, 2023, the balance of trade receivables overdue from 1 to 60 days of R$ 26,790 (R$ 36,995 as of December 31, 2022), refers to a series of individual clients. The Group considers these extensions and delays as expected in its credit risk analysis. |
CI&T Inc.
Unaudited condensed consolidated interim financial statements
March 31, 2023
The movement of impairment loss on trade receivables is as follows:
|
Balance as of January 1, 2023 |
(653) |
|
Provision |
(612) |
|
Reversal |
701 |
|
Exchange variation |
(12) |
|
Balance as of March 31, 2023 |
(576) |
|
Balance as of January 1, 2022 |
(1,059) |
|
Provision |
(299) |
|
Reversal |
297 |
|
Write-off |
655 |
|
Exchange variation |
205 |
|
Balance as of March 31, 2022 |
(201) |
9 Other assets
|
|
March 31, 2023 |
December 31, 2022 |
|
|
Prepaid expenses (a) |
30,670 |
37,527 |
|
|
Rental security deposits |
2,921 |
3,179 |
|
|
Advance to suppliers |
86 |
242 |
|
|
Other |
1,816 |
975 |
|
|
Total |
35,493 |
41,923 |
|
|
Current |
31,856 |
38,269 |
|
|
Non-current |
3,637 |
3,654 |
|
|
Total |
35,493 |
41,923 |
| (a) | Prepaid expenses are mostly comprised of prepaid insurance, mainly related to directors’ and officers’ liability insurance, consulting, software support prepayments. |
CI&T Inc.
Unaudited condensed consolidated interim financial statements
March 31, 2023
10 Property, plant and equipment
|
. |
March 31, 2023 |
December 31, 2022 |
|
|
IT equipment |
36,080 |
37,963 |
|
|
Furniture and fixtures |
4,598 |
5,064 |
|
|
Leasehold improvements (a) |
11,266 |
12,226 |
|
|
Property, plant and equipment in progress |
88 |
13 |
|
|
Total |
52,032 |
55,266 |
(a) Improvements are depreciated on a straight-line basis based over the duration of the lease agreement.
The changes in the balances are as follows:
|
IT equipment |
Furniture and fixtures |
Leasehold improvements |
In progress |
Total |
|||||
|
Cost: |
|
|
|
|
|
||||
|
Balance as of January 1, 2022 |
63,640 |
13,869 |
30,915 |
157 |
108,581 |
||||
|
Exchange rate changes |
(1,770) |
(531) |
(1,218) |
- |
(3,519) |
||||
|
Addition due to business combination (note 2) |
2,334 |
25 |
- |
- |
2,359 |
||||
|
Additions |
7,868 |
75 |
26 |
48 |
8,017 |
||||
|
Disposals |
(3,301) |
(434) |
(5,079) |
(19) |
(8,833) |
||||
|
Transfers |
6 |
- |
115 |
(121) |
- |
||||
|
Balance as of March 31, 2022 |
68,777 |
13,004 |
24,759 |
65 |
106,605 |
||||
|
Balance as of January 1, 2023 |
75,547 |
10,308 |
21,498 |
13 |
107,366 |
||||
|
Exchange rate changes |
(173) |
(100) |
(204) |
- |
(477) |
||||
|
Additions |
2,514 |
23 |
- |
78 |
2,615 |
||||
|
Disposals |
(184) |
(674) |
- |
- |
(858) |
||||
|
Transfers |
- |
- |
3 |
(3) |
- |
||||
|
Balance as of March 31, 2023 |
77,704 |
9,557 |
21,297 |
88 |
108,646 |
||||
|
Depreciation: |
|
|
|
|
|
||||
|
Balance as of December 31, 2021 |
(28,410) |
(7,586) |
(14,864) |
- |
(50,860) |
||||
|
Exchange rate changes |
973 |
188 |
354 |
- |
1,515 |
||||
|
Additions |
(3,770) |
(347) |
(842) |
- |
(4,959) |
||||
|
Disposals |
1,744 |
607 |
4,729 |
- |
7,080 |
||||
|
Balance as of March 31, 2022 |
(29,463) |
(7,138) |
(10,623) |
- |
(47,224) |
||||
|
Balance as of December 31, 2022 |
(37,584) |
(5,244) |
(9,272) |
- |
(52,100) |
||||
|
Exchange rate changes |
206 |
(41) |
77 |
- |
242 |
||||
|
Additions |
(4,401) |
(291) |
(836) |
- |
(5,528) |
||||
|
Disposals |
155 |
617 |
- |
- |
772 |
||||
|
Balance as of March 31, 2023 |
(41,624) |
(4,959) |
(10,031) |
- |
(56,614) |
||||
|
Balance as of: |
|
|
|
|
|
||||
|
December 31, 2022 |
37,963 |
5,064 |
12,226 |
13 |
55,266 |
||||
|
March 31, 2023 |
36,080 |
4,598 |
11,266 |
88 |
52,032 |
The Group does not have property, plant or equipment pledged as collateral.
CI&T Inc.
Unaudited condensed consolidated interim financial statements
March 31, 2023
11 Intangible assets
|
|
March 31, 2023 |
December 31, 2022 |
|
|
Software |
5,352 |
5,641 |
|
|
Internally developed software (i) |
3,544 |
4,059 |
|
|
Software in progress |
2,485 |
1,032 |
|
|
Customer relationship |
274,890 |
288,943 |
|
|
Non-compete agreement |
10,107 |
10,865 |
|
|
Brands (i) |
5,849 |
7,464 |
|
|
Subtotal |
302,227 |
318,004 |
|
|
Goodwill |
1,416,999 |
1,432,894 |
|
|
Total |
1,719,226 |
1,750,898 |
| (i) | Refers to internal expenses with software development to be sold by the Group and also for internal use. |
Goodwill arising from the following acquisitions:
|
March 31, 2023 |
December 31, 2022 |
||
|
CI&T IN Software (i) |
2,871 |
2,871 |
|
|
CI&T Japan (ii) |
974 |
1,007 |
|
|
Comrade (i)(ii) |
17,119 |
18,367 |
|
|
Dextra (i) |
595,721 |
595,721 |
|
|
Somo (ii) |
260,715 |
260,466 |
|
|
Box 1824 (i) |
21,525 |
21,525 |
|
| Transpire (ii) | 61,187 | 63,702 | |
| Ntersol (ii) | 456,887 | 469,235 | |
|
|
1,416,999 |
1,432,894 |
| (i) | Merged subsidiaries. |
| (ii) | Goodwill recorded in foreign currency, being subject to exchange variation at each reporting date. |
CI&T Inc.
Unaudited condensed consolidated interim financial statements
March 31, 2023
The change in the balances of intangible assets as follows:
|
|
Network software |
Internally developed software |
Software in progress |
Customer relationship |
Non-compete agreement |
Brands |
Goodwill |
Total |
|||||||
|
Cost: |
|
|
|
|
|
|
|
|
|||||||
|
Balance as of January 1, 2022 |
11,942 |
16,581 |
391 |
88,961 |
13,462 |
20,501 |
619,469 |
771,307 |
|||||||
|
Additions due to business combination Somo (i)(note 2) |
- |
- |
- |
49,539 |
- |
7,746 |
317,179 |
374,464 |
|||||||
|
Exchange rate changes |
(78) |
- |
- |
- |
- |
- |
(55,169) |
(55,247) |
|||||||
|
Additions |
52 |
- |
226 |
- |
- |
- |
- |
278 |
|||||||
|
Write-off |
(731) |
- |
(32) |
- |
- |
- |
- |
(763) |
|||||||
|
Transfers |
50 |
- |
(50) |
- |
- |
- |
- |
- |
|||||||
|
Balance as of March 31, 2022 |
11,235 |
16,581 |
535 |
138,500 |
13,462 |
28,247 |
881,479 |
1,090,039 |
|||||||
|
Balance as of December 31, 2022 |
15,186 |
18,586 |
1,032 |
313,259 |
13,462 |
33,798 |
1,432,894 |
1,828,217 |
|||||||
|
Exchange rate changes |
(101) |
- |
- |
(4,096) |
- |
- |
(15,895) |
(20,092) |
|||||||
|
Additions |
179 |
- |
1,453 |
- |
- |
- |
- |
1,632 |
|||||||
|
Disposals |
(1) |
(4) |
- |
- |
- |
- |
- |
(5) |
|||||||
|
Balance as of March 31, 2023 |
15,263 |
18,582 |
2,485 |
309,163 |
13,462 |
33,798 |
1,416,999 |
1,809,752 |
|||||||
|
Amortization: |
|
|
|
|
|
|
|
|
|||||||
|
Balance as of January 1, 2022 |
(9,543) |
(12,670) |
- |
(4,766) |
435 |
(5,960) |
- |
(32,504) |
|||||||
|
Exchange rate changes |
96 |
- |
- |
- |
- |
- |
- |
96 |
|||||||
|
Additions |
(260) |
(475) |
- |
(3,020) |
(758) |
(3,851) |
- |
(8,364) |
|||||||
|
Write-off |
741 |
- |
- |
- |
- |
- |
- |
741 |
|||||||
|
Balance as of March 31, 2022 |
(8,966) |
(13,145) |
- |
(7,786) |
(323) |
(9,811) |
- |
(40,031) |
|||||||
|
Balance as of December 31, 2022 |
(9,545) |
(14,527) |
- |
(24,316) |
(2,597) |
(26,334) |
- |
(77,319) |
|||||||
|
Exchange rate changes |
16 |
- |
- |
211 |
- |
- |
- |
227 |
|||||||
|
Additions |
(383) |
(511) |
- |
(10,168) |
(758) |
(1,615) |
- |
(13,435) |
|||||||
|
Disposals |
1 |
- |
- |
- |
- |
- |
- |
1 |
|||||||
|
Balance as of March 31, 2023 |
(9,911) |
(15,038) |
- |
(34,273) |
(3,355) |
(27,949) |
- |
(90,526) |
|||||||
|
Balance at: |
|
|
|
|
|
|
|
|
|||||||
|
December 31, 2022 |
5,641 |
4,059 |
1,032 |
288,943 |
10,865 |
7,464 |
1,432,894 |
1,750,898 |
|||||||
|
March 31, 2023 |
5,352 |
3,544 |
2,485 |
274,890 |
10,107 |
5,849 |
1,416,999 |
1,719,226 |
| (i) | Refers to the amount of goodwill on the acquisition date. |
Impairment test – Goodwill
For the period ended March 31, 2023, Management did not identify factors that could significantly change the assumptions used in the annual impairment analysis and, therefore, did not identify any indicator of impairment of intangible assets and goodwill.
CI&T Inc.
Unaudited condensed consolidated interim financial statements
March 31, 2023
12 Leases
- Right-of-use assets
|
. |
March 31, 2023 |
December 31, 2022 |
|
|
Properties |
42,589 |
48,415 |
|
|
Vehicles |
7,813 |
7,772 |
|
|
Total |
50,402 |
56,187 |
Some of the Group’s leases have the option of an extension that can be exercised for an indefinite period, and in these cases the Group has already considered in the measurement of the lease amounts the extensions that are reasonably certain to be exercised.
The Group applies the short-term lease recognition exemption to its short-term leases of properties (those leases that have a lease term of 12 months or less). It also applies the lease of low-value assets recognition exemption to leases that are considered of low value. Lease payments on short-term leases and leases of low-value assets are recognized as expenses on a straight-line basis. The remained rental expenses for the period totaled R$ 1,714 as of March 31, 2023 (R$ 1,717 as of March 31, 2022).
The changes to balances of the right-of-use are:
|
|
Properties |
Vehicles |
IT equipment |
Total |
|||
|
Cost: |
|
|
|
|
|||
|
Balance as of January 1, 2022 |
107,640 |
6,372 |
851 |
114,863 |
|||
|
Additions due to business combination (note 2) |
6,800 |
- |
- |
6,800 |
|||
|
Exchange rate changes |
(1,073) |
- |
- |
(1,073) |
|||
|
Additions |
2,209 |
2,637 |
- |
4,846 |
|||
|
Derecognition of right-of-use assets |
(340) |
(469) |
- |
(809) |
|||
|
Balance on March 31, 2022 |
115,236 |
8,540 |
851 |
124,627 |
|||
|
Balance as of December 31, 2022 |
90,587 |
12,198 |
- |
102,785 |
|||
|
Exchange rate changes |
(1,285) |
- |
- |
(1,285) |
|||
|
Additions |
261 |
1,470 |
- |
1,731 |
|||
|
Derecognition of right-of-use assets |
(352) |
(1,113) |
- |
(1,465) |
|||
|
Balance on March 31, 2023 |
89,211 |
12,555 |
- |
101,766 |
|||
|
Depreciation: |
|
|
|
|
|||
|
Initial amount on January 1, 2022 |
(38,200) |
(2,199) |
(638) |
(41,037) |
|||
|
Exchange rate changes |
(3,732) |
- |
- |
(3,732) |
|||
|
Depreciation |
(5,359) |
(637) |
(71) |
(6,067) |
|||
|
Derecognition of right-of-use assets |
- |
413 |
- |
413 |
|||
|
Balance on March 31, 2022 |
(47,291) |
(2,423) |
(709) |
(50,423) |
|||
|
Balance on December 31, 2022 |
(42,172) |
(4,426) |
- |
(46,598) |
|||
|
Exchange rate changes |
618 |
- |
- |
618 |
|||
|
Depreciation |
(5,068) |
(1,022) |
- |
(6,090) |
|||
|
Derecognition of right-of-use assets |
- |
706 |
- |
706 |
|||
|
Balance on March 31, 2023 |
(46,622) |
(4,742) |
- |
(51,364) |
|||
|
Net balance at: |
|
|
|
|
|||
|
December 31, 2022 |
48,415 |
7,772 |
- |
56,187 |
|||
|
March 31, 2023 |
42,589 |
7,813 |
- |
50,402 |
CI&T Inc.
Unaudited condensed consolidated interim financial statements
March 31, 2023
|
|
Average discount rate (per year) |
March 31, 2023 |
December 31, 2022 |
||
|
Properties |
8.05% (2022: 8.26%) |
48,591 |
54,369 |
||
|
Vehicles |
17.09% (2022: 16.63%) |
8,367 |
8,439 |
||
|
Total |
|
56,958 |
62,808 |
||
|
Current |
|
19,922 |
21,539 |
||
|
Non-current |
|
37,036 |
41,269 |
||
|
Total |
|
56,958 |
62,808 |
The change in lease liabilities is disclosed in the reconciliation of change in liabilities to cash flows in note 13.
13 Loans and borrowings
Loans and borrowings operations can be summarized as follows:
|
Currency |
Average interest rate per year (%) |
Year of maturity |
March 31, 2023 |
December 31, 2022 |
|||||
|
Bradesco (i) |
R$ |
CDI + 1.10% |
2023 |
- |
1,669 |
||||
|
Citibank (ii) |
US$ |
4.06% p.a. / 2.28% p.a. |
2023 |
15,073 |
14,937 |
||||
|
Bradesco (i) |
R$ |
CDI + 1.75% |
2026 |
283,444 |
296,774 |
||||
|
Citibank (i) |
US$ |
Libor 3 months rate + 2.07% |
2026 |
129,830 |
129,701 |
||||
|
Itaú (ii) |
US$ |
4.86% p.a. |
2023 |
54,089 |
53,500 |
||||
|
Citibank (ii) |
US$ |
3.80% p.a. |
2023 |
10,280 |
10,191 |
||||
|
Bradesco (ii) |
US$ |
3.98% p.a. |
2023 |
15,323 |
15,183 |
||||
|
Santander (ii) |
US$ |
5.02% p.a. |
2026 |
103,319 |
111,106 |
||||
|
Citibank (ii) |
US$ |
SOFR 2.79% p.a. |
2027 |
206,130 |
209,193 |
||||
|
HSBC (ii) |
US$ |
SOFR 2.90% p.a. |
2027 |
130,836 |
131,977 |
||||
|
Total |
|
|
|
948,324 |
974,231 |
(i) Export credit note - NCE: Refers to financing to export software development services.
(ii) Advance on Foreign Exchange Contract (ACC).
These balances were included as current and non-current borrowings in the consolidated statement of financial position as follows:
|
|
March 31, 2023 |
December 31, 2022 |
|
|
Current |
233,583 |
231,296 |
|
|
Non-current |
714,741 |
742,935 |
|
|
Total |
948,324 |
974,231 |
The principal balances of long-term loans and borrowings as of March 31, 2023, mature as follows:
|
2024 |
137,106 |
|
2025 |
243,244 |
|
2026 |
232,491 |
|
2027 |
101,900 |
|
Non-current liabilities |
714,741 |
CI&T Inc.
Unaudited condensed consolidated interim financial statements
March 31, 2023
The reconciliation of change in liabilities to cash flows arising from financing activities is shown below:
|
|
Liabilities |
Leases |
Liabilities |
Net Equity |
Total |
||||
|
|
Loans and borrowings |
Leases (note 12.b) |
Accounts payable for business combination (Note 15) |
Reserves |
|
||||
|
Balance as of December 31, 2022 |
974,231 |
62,808 |
204,949 |
1,401,264 |
2,643,289 |
||||
|
Changes in cash flow from financing activities |
|
|
|
|
|
||||
|
Loans, borrowings and lease liabilities payments |
(19,432) |
(5,919) |
- |
- |
(25,351) |
||||
|
Proceeds from exercise of share options |
- |
- |
- |
478 |
478 |
||||
|
Settlement of derivatives |
2,839 |
- |
- |
- |
2,839 |
||||
|
Payment related to business combination |
- |
- |
(1,235) |
- |
(1,235) |
||||
|
Total changes in cash flow from financing activities |
(16,593) |
(5,919) |
(1,235) |
478 |
(23,269) |
||||
|
Exchange rate changes |
(11,892) |
(750) |
(2,004) |
- |
(14,646) |
||||
|
Other changes - liabilities |
|
|
|
|
|
||||
|
New leases |
- |
1,732 |
- |
- |
1,732 |
||||
|
Interest expenses |
21,079 |
1,179 |
- |
- |
22,258 |
||||
|
Interest paid |
(15,534) |
(1,148) |
- |
- |
(16,682) |
||||
|
Other borrowing/lease costs |
(2,967) |
- |
- |
- |
(2,967) |
||||
|
Lease write-offs |
- |
(944) |
- |
- |
(944) |
||||
|
Other changes liabilities |
- |
- |
2,976 |
- |
2,976 |
||||
|
Total other changes - liabilities |
2,578 |
819 |
2,976 |
- |
6,373 |
||||
|
Total other changes - equity |
- |
- |
- |
57,779 |
57,779 |
||||
|
Balance as of March 31, 2023 |
948,324 |
56,958 |
204,686 |
1,459,521 |
2,669,489 |
|
|
Liabilities |
Leases |
Net Equity |
Total |
|||
|
|
Loans and financing |
Leases |
Reserves |
|
|||
|
Balance as of January 1, 2022 |
788,709 |
81,888 |
1,052,042 |
1,922,639 |
|||
|
Changes in cash flow from financing activities |
|
|
|
|
|||
|
Loan and borrowings payments, and lease payments |
(38,506) |
(6,084) |
- |
(44,590) |
|||
|
Proceeds from exercise of share options |
- |
- |
5,128 |
5,128 |
|||
|
Settlement of derivatives |
(381) |
- |
- |
(381) |
|||
|
Total changes in financing cash flows |
(38,887) |
(6,084) |
5,128 |
(39,843) |
|||
|
Effect of changes in exchange rates |
(2,604) |
(5,174) |
- |
(7,778) |
|||
|
Other changes - related to liabilities |
|
|
|
|
|||
|
Additions due to business combination (note 2) |
42,268 |
6,800 |
- |
49,068 |
|||
|
New leases |
- |
4,847 |
- |
4,847 |
|||
|
Interest expense |
15,990 |
2,146 |
- |
18,136 |
|||
|
Interest paid |
(19,458) |
(1,479) |
- |
(20,937) |
|||
|
Other borrowing/lease costs |
(38,042) |
(195) |
- |
(38,237) |
|||
|
Lease write-offs |
- |
(245) |
- |
(245) |
|||
|
Total other changes related to liabilities |
758 |
11,874 |
- |
12,632 |
|||
|
Total other changes related to equity |
- |
- |
43,404 |
43,404 |
|||
|
Balance as of March 31, 2022 |
747,976 |
82,504 |
1,100,541 |
1,931,021 |
CI&T Inc.
Unaudited condensed consolidated interim financial statements
March 31, 2023
Loans and borrowings covenants
The loans and borrowings are subject to covenants, which establish the early maturity of debts. Early maturity of the loans could be caused by:
- Disposal, merger, incorporation, spin-off, or any other corporate reorganization process that implies a change in the shareholding control, without prior consent from the creditor;
- Some of the debt contracts held by the Group include covenants that demand the maintenance of specific ratios, such as the Net Debt to EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) ratio.
The Group has complied with these covenants as of March 31, 2023 and December 31,2022.
14 Salaries and welfare charges
|
|
March 31, 2023 |
December 31, 2022 |
|
|
Salaries |
31,883 |
30,551 |
|
|
Accrued vacation and charges |
112,631 |
107,801 |
|
|
Bonus |
47,021 |
64,815 |
|
|
Withholding income tax |
20,803 |
29,267 |
|
|
Payroll charges (social contributions) |
12,695 |
15,168 |
|
|
Others |
26,768 |
12,554 |
|
|
Total |
251,801 |
260,156 |
15 Accounts payable for business combination
|
|
March 31, 2023 |
December 31, 2022 |
|
|
Dextra |
|
|
|
|
Retained amount |
35,275 |
34,183 |
|
|
|
35,275 |
34,183 |
|
|
Somo |
|
|
|
|
Earn-out |
61,588 |
61,529 |
|
|
Escrow account |
18,854 |
20,091 |
|
|
Other |
2,149 |
2,148 |
|
|
|
82,591 |
83,768 |
|
|
Box 1824 |
|
|
|
|
Retained amount |
9,460 |
9,165 |
|
|
Other |
974 |
974 |
|
|
|
10,434 |
10,139 |
|
|
Ntersol |
|
|
|
|
Retained amount |
75,631 |
76,084 |
|
|
Other |
755 |
775 |
|
|
|
76,386 |
76,859 |
|
|
Current |
72,005 |
71,650 |
|
|
Non-current |
132,681 |
133,299 |
|
|
Total |
204,686 |
204,949 |
CI&T Inc.
Unaudited condensed consolidated interim financial statements
March 31, 2023
The table below shows the movement of the accounts payable for business combination:
| March 31, 2023 | |||||||||||
|
|
Balance as of January 1, 2023 |
Monetary adjustment(i) |
Exchange variation |
Fair value / Present value adjustments |
Payment |
Balance as of March 31, 2023 |
|||||
|
Accounts payable for business combination |
204,949 |
1,387 |
(2,004) |
1,589 |
(1,235) |
204,686 |
|||||
|
Dextra |
34,183 |
1,092 |
- |
- |
- |
35,275 |
|||||
|
Somo |
83,768 |
- |
58 |
- |
(1,235) |
82,591 |
|||||
|
Box |
10,139 |
295 |
- |
- |
- |
10,434 |
|||||
|
Ntersol |
76,859 |
- |
(2,062) |
1,589 |
- |
76,386 |
|||||
|
|
March 31, 2022 | ||||||||||
|
|
Balance as of January 1, 2022 |
Monetary adjustment (i) |
Price adjustment review |
Acquisitions (note 2) |
Exchange variation |
Balance as of March 31, 2022 |
|||||
|
Accounts payable for business combination |
85,726 |
2,033 |
2,365 |
92,600 |
(13,661) |
169,063 |
|||||
|
Dextra |
85,726 |
2,033 |
- |
- |
- |
90,124 |
|||||
|
Somo |
- |
- |
- |
92,600 |
(13,661) |
78,939 |
|||||
(i) Adjusted by the CDI rate
16 Provisions
The Group is involved in tax and labor lawsuits that were considered probable losses and are provisioned according to the table below:
|
0 |
Balance as of January 1, 2022 |
Provisions |
Reversal |
Payments |
Balance as of March 31, 2022 |
Provisions assumed in a business combination (i) |
Reversal of provisions assumed in a business combination (i) |
Provisions |
Reversal |
Balance as of December 31, 2022 |
Reversal |
Balance as of March 31, 2023 |
|||||||||||
|
Tax |
131 |
69 |
- |
- |
200 |
- |
- |
8 |
(3) |
205 |
(192) |
13 |
|||||||||||
|
Labor |
502 |
582 |
(80) |
(15) |
989 |
13,583 |
(2,240) |
- |
(190) |
12,142 |
(81) |
12,061 |
|||||||||||
|
Total Provisions |
633 |
651 |
(80) |
(15) |
1,189 |
13,583 |
(2,240) |
8 |
(193) |
12,347 |
(273) |
12,074 |
| (i) |
In relation to the business combination with Box 1824, the Group has also assumed an amount of R$ 11,343 (R$ 13,583 on the acquisition date) related to labor contingencies liability. |
The main labor lawsuits referred to above refer to the compliance with minimum quota of employees with disabilities and lack of control over working hours.
Additionally, the Group is a party to civil, labor and tax lawsuits, whose likelihood of loss is regarded as possible, for which no provision was recorded, in the amount of R$ 10,742 as of March 31, 2023 (R$ 10,563 as of December 31, 2022).
Judicial deposits
As of March 31, 2023, the Group’s judicial deposits totaled R$ 9,710 (R$ 9,819 as of December 31, 2022), recognized in the statement of financial position, in non-current assets. Of this amount, R$ 9,438 (R$ 9,405 as of December 31, 2022) refer to tax lawsuits, R$272 (R$415 as of December 31, 2022) refer to labor lawsuits.
CI&T Inc.
Unaudited condensed consolidated interim financial statements
March 31, 2023
17 Employee benefits
The Group provides its employees with benefits that include medical care, dental care and life insurance during their employment. These benefits are paid by the Group and according to the category of health plans elected, with a consideration paid by the employee.
Additionally, the Group offers its employees the option to participate in a private pension plan to which voluntary contributions are made. For CI&T US, CI&T UK and CI&T Canada, the subsidiaries contribute with the same amount as the participants up to 4% of the employee salary. In both scenarios there is no consideration to be paid by the subsidiaries, as there are no post-employment obligations. The nature of the plan allows employees to suspend or discontinue their contributions at any time and allows the Management to transfer the portfolio to another administrator.
The Group does not have additional post-employment obligations and none other long-term benefits, such as time-of-service leave, lifetime health plan and other time-service benefits.
18 Stock-based compensation
a. Equity-settled and cash-settled stock-based payment arrangements
The key terms and conditions related to the grants under the Stock option, Incentive stock option and Restricted stock units programs are as follows:
|
Plan / Grant date |
Currency |
Number of |
Fair value at grant date (R$) |
Contractual life (i) |
Limit date (i) |
||||
|
Equity-settled stock-based payment arrangement |
|
|
|
|
|
||||
|
Stock options plan (SOP) |
|
|
|
|
|
||||
|
04/01/2020 – 1stand 2nd program |
R$ |
3,940,478 |
1,846 |
6.8 years |
01/01/2027 |
||||
|
04/01/2021 – 3rd program |
R$ |
666,616 |
1,275 |
5.8 years |
01/01/2027 |
||||
|
04/01/2021 – 4th program |
R$ |
187,820 |
298 |
5.8 years |
01/01/2027 |
||||
|
04/01/2022 |
US$ |
290,099 |
4,593 |
6.8 years |
01/01/2028 |
||||
|
08/01/2022 |
US$ |
133,245 |
737 |
5.5 years |
01/01/2028 |
||||
|
09/01/2022 |
US$ |
87,629 |
170 |
5.4 years |
01/01/2028 |
||||
|
10/01/2022 |
US$ |
7,606 |
11 |
5.3 years |
01/01/2028 |
||||
|
Incentive stock options (ISO) |
|
|
|
|
|
||||
|
10/01/2022 |
US$ |
83,522 |
187 |
5.3 years |
01/01/2027 |
||||
|
Restricted stock units (RSU) |
|
|
|
|
|
||||
|
10/01/2022 |
US$ |
46,314 |
2,250 |
5.3 years |
01/01/2027 |
||||
|
11/01/2022 |
US$ |
1,399,998 |
59,771 |
3.5 years |
01/01/2026 |
||||
|
Equity-settled stock-based payment arrangement |
|
|
|
|
|
||||
|
Stock options plan (SOP) |
|
|
|
|
|
||||
|
04/01/2020 - 2nd Program |
R$ |
69,774 |
6.8 years |
01/01/2027 |
801 |
||||
|
10/06/2021 - 3rd program |
R$ |
6,065 |
5.3 years |
01/01/2027 |
13 |
||||
|
10/21/2021 - 4th program |
R$ |
6,065 |
5.2 years |
01/01/2027 |
23 |
||||
|
10/11/2022 |
US$ |
13,101 |
5.3 years |
01/01/2028 |
1 |
(i) Conditional upon the grace period and assuming the possibility of anticipated vesting in face of a liquidity event.
CI&T Inc.
Unaudited condensed consolidated interim financial statements
March 31, 2023
b. Measurement of fair values
The Company estimated the following assumptions for the calculation of the fair value of the share options:
b.1 Equity settled
|
Plan / Grant date |
Currency |
Exercise |
Share price at grant date |
Interest |
Volatility |
Fair value at grant date |
Expected life |
||||||
|
Stock options plan (SOP) |
|
|
|
|
|
|
|
||||||
|
04/01/2020 - 1st and 2nd Program |
R$ |
9.58 |
21.68 |
24.19% |
1.53% |
0.48 |
3.7 years |
||||||
|
04/01/2021 - 3rd program |
R$ |
19.84 |
21.68 |
27.73% |
2.66% |
1.81 |
4.3 years |
||||||
|
04/01/2021 - 4th program |
R$ |
19.84 |
21.68 |
27.73% |
2.66% |
1.85 |
4.3 years |
||||||
|
04/01/2022 |
US$ |
16.75 |
17.50 |
27.44% |
0.39% |
3.37 |
3.0 years |
||||||
|
04/01/2022 |
US$ |
15.00 |
11.50 |
27.44% |
2.60% |
1.08 |
2.4 years |
||||||
|
04/01/2022 |
US$ |
16.75-16.95 |
8.13 |
27.44% |
3.26% |
0.65 |
2.4 years |
||||||
|
04/01/2022 |
US$ |
17.50 |
9.39 |
27.44% |
3.83% |
0.26 |
2.4 years |
||||||
|
Incentive stock options (ISO) |
|
|
|
|
|
|
|
||||||
|
10/01/2022 |
US$ |
16.75 |
9.39 |
27.44% |
3.83% |
0.44 |
2.3 years |
||||||
|
Restricted stock units (RSU) |
|
|
|
|
|
|
|
||||||
|
10/01/2022 |
US$ |
n/a |
9.39 |
27.44% |
3.83% |
9.39 |
3.7 years |
||||||
|
10/01/2022 |
US$ |
n/a |
8.29 |
27.44% |
4.07% |
8.29 |
3.5 years |
- Expected volatility: The expected volatility was estimated based on the historical volatility of the comparable companies share prices. The expected life of options represents the period of time the granted options are expected to be outstanding.
b.2 Cash-settled
The inputs used in the measurement of the fair value at grant date were remeasured on March 31, 2023:
|
Grant date |
Currency |
Exercise |
Share price on March 31, 2023 |
Interest |
Volatility |
Fair value at remeasured date March 31, 2023 |
Expected life |
||||||
|
Stock options plan (SOP) |
|
|
|
|
|
|
|
||||||
|
04/01/2020 - 2nd Program |
R$ |
9.58 |
26.88 |
3.55% |
31.71% |
18.75 |
1.8 years |
||||||
|
10/06/2021 - 4th program |
R$ |
19.84 |
26.88 |
3.55% |
31.71% |
10.62 |
2.0 years |
||||||
|
10/21/2021 - 4th program |
R$ |
19.84 |
26.88 |
3.55% |
31.71% |
10.62 |
2.0 years |
||||||
|
10/01/2022 |
US$ |
16.75 |
5.29 |
3.55% |
31.71% |
0.03 |
2.2 years |
CI&T Inc.
Unaudited condensed consolidated interim financial statements
March 31, 2023
c. Reconciliation of outstanding share options and RSUs
The following shows the evolution of the share options and RSUs for the year ended at March 31, 2023:
|
Grant date |
Number of granted options/RSUs |
(-) Canceled |
(-) Exercised |
Number of outstanding on 03/31/2023 |
Number of vested on 03/31/2023 |
||||
|
Equity-settled stock-based payment arrangement |
|
|
|
|
|
||||
|
Stock options plan (SOP) |
|
|
|
|
|
||||
|
04/01/2020 - 1st and 2nd Program |
3,940,478 |
(78,360) |
(991,973) |
2,870,145 |
2,315,032 |
||||
|
04/01/2021 - 3rd program |
666,616 |
- |
(79,620) |
586,996 |
266,644 |
||||
|
04/01/2021 - 4th program |
187,820 |
(19,900) |
(12,367) |
155,553 |
56,348 |
||||
|
04/01/2022 |
290,099 |
- |
- |
290,099 |
58,020 |
||||
|
08/01/2022 |
133,245 |
- |
- |
133,245 |
26,649 |
||||
|
09/01/2022 |
87,629 |
- |
- |
87,629 |
17,526 |
||||
|
10/01/2022 |
7,606 |
- |
- |
7,606 |
1,521 |
||||
|
|
5,313,493 |
(98,260) |
(1,083,960) |
4,131,273 |
2,741,740 |
||||
|
Incentive stock options (ISO) |
|
|
|
|
|
||||
|
10/01/2022 |
83,522 |
- |
- |
83,522 |
16,704 |
||||
|
|
83,522 |
- |
- |
83,522 |
16,704 |
||||
|
Restricted stock units (RSU) |
|
|
|
|
|
||||
|
10/01/2022 |
46,314 |
- |
(9,282) |
37,032 |
9,282 |
||||
|
11/10/2022 |
1,399,998 |
- |
- |
1,399,998 |
- |
||||
|
|
1,446,312 |
- |
(9,282) |
1,437,030 |
9,282 |
||||
|
Equity-settled stock-based payment arrangement |
|
|
|
|
|
||||
|
Stock options plan (SOP) |
|
|
|
|
|
||||
|
04/01/2020 - 2nd Program |
69,774 |
- |
(1,774) |
68,000 |
40,993 |
||||
|
10/06/2021 - 3rd program |
6,065 |
- |
(909) |
5,156 |
1,818 |
||||
|
10/21/2021 - 4th program |
6,065 |
- |
- |
6,065 |
1,818 |
||||
|
10/01/2022 |
13,101 |
- |
- |
13,101 |
2,620 |
||||
|
|
95,005 |
- |
(2,683) |
92,322 |
47,249 |
d. Expenses recognized in profit or loss
|
|
March 31, 2023 |
March 31, 2022 |
|
|
Plan in force: |
|
|
|
|
Equity settled - SOP |
467 |
144 |
|
|
Equity settled - RSU |
4,783 |
- |
|
|
Equity settled - ISO |
9 |
- |
|
|
Cash settled |
(58) |
1,095 |
|
|
Shares granted to executives’ officers |
192 |
- |
|
|
Expenses recognized in profit or loss (note 21) |
5,393 |
1,239 |
|
|
RSUs issued during the year |
(471) |
- |
|
|
Total |
4,922 |
1,239 |
|
|
(-) Effect of cash settled |
58 |
(1,095) |
|
|
Effect of movements in exchange rates |
(54) |
- |
|
|
Total shareholders’ equity |
4,926 |
144 |
CI&T Inc.
Unaudited condensed consolidated interim financial statements
March 31, 2023
19 Equity
a. Share capital
|
|
March 31, 2023 |
December 31, 2022 |
|
|
Number of ordinary nominative shares |
132,855,983 |
133,814,311 |
|
|
Par value |
0.00027 |
0.00027 |
|
|
Share capital |
37 |
37 |
As of March 31, 2023 the total issued share capital of R$ 37 (R$ 37 as of December 31, 2022) is divided into 133,855,983 common shares (133,814,311 as of December 31, 2022).
Those common shares are divided into 20,044,851 Class A common shares, including 225,649 Class A common shares that were issued as part of the payment for the Somo acquisition in January 2022, 341,631 Class A common shares that were issued in August 2022 as part of the payment for the Transpire acquisition on September 1, 2022, both of them issued accordingly the CI&T´s share price at their respective transaction dates, and 1,090,807 Class A common shares issued until March 2023 in connection with the Company’s stock-based compensation plan (see note 18), and 113,811,132 Class B common shares.
The holders of the Class A common shares and Class B common shares have identical rights, except that (i) the holders of Class B common shares are entitled to ten votes per share, whereas holders of Class A common shares are entitled to one vote per share, (ii) Class B common shares have certain conversion rights and (iii) the holders of Class B common shares are entitled to maintain a proportional ownership interest in the event that additional Class A common shares are issued, however that such rights to purchase additional Class B common shares may only be exercised with Class B Shareholder Consent.
b. Share premium
After the Company has completed its initial public offering in November 2021 (note 1), the share premium referred to the difference between the subscription price (US$ 15.00 per share) that the shareholders paid for the shares and their nominal value (US$ 0.00005 per share), as a total amount of R$ 915,947 (US$ 166,666).
CI&T Inc.
Unaudited condensed consolidated interim financial statements
March 31, 2023
In connection with the business combinations occurred in 2022, the share premium increased by R$ 14,037 from shares issued as part of the payment for the Somo acquisition in January 2022 and R$ 16,189 from shares issued as part of the payment for the Transpire acquisition in September 2022. As of March 31, 2023 and December 31, 2022, the total amount of share premium is R$ 946,173.
c. Capital reserve
Stock-based compensation
The Group stock-based compensation plans in place were accounted as Capital reserve (see note 18).
d. Earnings reserves
|
|
March 31, 2023 |
December 31, 2022 |
|
|
Retained earnings reserve |
251,873 |
251,873 |
|
|
Retained earnings – net profit for the period |
52,382 |
- |
|
|
Total retained earnings |
304,255 |
251,873 |
As of March 31, 2023, the Company’s Board of Directors has not yet decided on the earnings reserve application.
e. Dividends and interest on shareholders’ equity
As of March 31, 2023, the Company had no dividends and interest on shareholder´s equity liability.
f. Other comprehensive income
Translation differences
Accumulated translation adjustments include all foreign currency translation differences on investments abroad.
Foreign currency translation exchange differences arising on translation of the foreign controlled entity are recognized in other comprehensive income, as described in note 8.b.ii, and accumulated in a separate reserve within equity. The cumulative amount is reclassified to profit or loss when the net investment is disposed of.
Cash flow hedges
As mentioned on note 25, since January 2022, the Company decided to apply hedge accounting for financial instruments (non-derivatives), with the purpose of hedging exchange rates in transactions related to highly probable risk operations. The movement of exchange variation to be realized by highly probable transactions is accumulated in other comprehensive income.
20 Net revenue
The Group generates revenue primarily through the provision of services described in the table below, which is summarized by nature:
|
|
March 31, 2023 |
March 31, 2022 |
|
|
Software development revenue |
580,876 |
470,662 |
|
|
Software maintenance revenue |
17,020 |
13,380 |
|
|
Revenue from software license agent |
726 |
249 |
|
|
Consulting revenue |
10,599 |
5,173 |
|
|
Other revenue |
770 |
2,408 |
|
|
Total net revenue |
609,991 |
491,872 |
CI&T Inc.
Unaudited condensed consolidated interim financial statements
March 31, 2023
The following table sets forth the net revenue by industry vertical for the periods indicated:
|
. |
March 31, 2023 |
March 31, 2022 |
|
|
By Industry Vertical |
|
|
|
|
Financial services |
174,783 |
156,326 |
|
|
Consumer goods |
116,156 |
104,369 |
|
|
Technology and telecommunications |
125,060 |
68,056 |
|
|
Retail and industrial goods |
75,814 |
73,222 |
|
|
Life sciences |
63,281 |
62,893 |
|
|
Others |
54,897 |
27,006 |
|
|
Total net revenue |
609,991 |
491,872 |
Performance obligations and revenue recognition policies
The revenue is measure based on the consideration specified in the contract with the client. The Group recognizes revenue when it transfers control over the product or service to the customer.
The table below provides information on the nature and timing of performance obligations in contracts with customers, including the revenue recognition policies listed in the main types of services:
|
Type of service |
Nature and timing of performance obligations |
Revenue recognition in accordance with IFRS 15 |
|
Services provision: |
The Group has determined that the customer controls all work in progress as the services are provided. This is because, according to these contracts, services are provided according to the client’s specifications and, if a contract is terminated by the client, the Group will be entitled to reimbursement of the costs incurred to date, including a reasonable margin.
Invoices are issued in accordance with contractual terms and are usually paid on average in 69 days as of March 31, 2023. Unbilled amounts are presented as contract assets. |
The associated revenue and costs are recognized over time. The progress of the performance obligation is measured based on the hours incurred.
|
|
Software License Agency |
The Group acts as an agent in software license agreements between the developer and the customer.
Invoices (related to agency fees) are issued in accordance with the contractual terms and are generally paid on average within 45 days. |
Revenue related to fees as agent is recognized when contracts are entered into. |
CI&T Inc.
Unaudited condensed consolidated interim financial statements
March 31, 2023
Contract assets
Contract assets relate mainly to the Group’s rights to consideration for services performed, for which control has been transferred to the client, but not invoiced on the reporting date. Contract assets are transferred to receivables when the Group issues an invoice to the client.
The balances from contract assets are shown and segregated in the statement of financial position as follows:
|
. |
March 31, 2023 |
December 31, 2022 |
|
|
Contract assets – Dollar denominated – from Brazilian customers |
135,155 |
94,613 |
|
|
Contract assets – Reais denominated – from US customers |
61,321 |
104,836 |
|
|
Contract assets – from other customers |
38,346 |
18,474 |
|
|
(-) Expected credit losses from contract assets |
(2,363) |
(673) |
|
|
Total |
232,459 |
217,250 |
The movement of expected credit losses of contract assets, is as follows:
|
Balance as of January 1, 2022 |
(913) |
|
Reversal (Provision) |
(1,064) |
|
Effect of movements in exchange rates |
177 |
|
Balance as of March 31, 2022 |
(1,800) |
|
Reversal (Provision) |
1,158 |
|
Effect of movements in exchange rates |
(31) |
|
Balance as of December 31, 2022 |
(673) |
|
Reversal (Provision) |
(1,694) |
|
Effect of movements in exchange rates |
4 |
|
Balance as of March 31, 2023 |
(2,363) |
21 Expenses by nature
Information on the nature of expenses recognized in the condensed consolidated interim statement of profit or loss is presented below:
|
|
March 31, 2023 |
March 31, 2022 |
|
|
Employee expenses |
(443,313) |
(365,596) |
|
|
Third-party services and other inputs |
(34,070) |
(24,226) |
|
|
Depreciation and amortization (a) |
(25,053) |
(19,390) |
|
|
Insurance |
(3,375) |
(4,107) |
|
|
Short-term leases (e) |
(1,714) |
(1,717) |
|
|
Travel expenses |
(2,563) |
(1,378) |
|
|
Training |
(976) |
(1,275) |
|
|
Stock-based compensation (b) |
(5,393) |
(1,239) |
|
|
Expected credit losses |
(1,605) |
(1,066) |
|
|
Consulting (c) |
(340) |
(2,695) |
|
|
Other post-acquisition expenses (d) |
(1,784) |
- |
|
|
Other costs and expenses |
(5,732) |
(7,934) |
|
|
Total |
(525,918) |
(430,623) |
|
|
Disclosed as: |
|
|
|
|
Costs of services provided |
(407,861) |
(328,992) |
|
|
Selling expenses |
(45,554) |
(35,129) |
|
|
General and administrative expenses |
(71,222) |
(64,921) |
|
|
Impairment loss on trade receivables and contract assets |
(1,605) |
(1,066) |
|
|
Other income (expenses) net |
324 |
(515) |
|
|
Total |
(525,918) |
(430,623) |
CI&T Inc.
Unaudited condensed consolidated interim financial statements
March 31, 2023
| (a) | Depreciation and amortization include R$ 9,410 (R$ 9,318 as of March 31, 2022) classified as cost of services, R$ 2,931 (R$ 10,072 as of March 31, 2022) as expenses and R$12,712 (R$ 7,628 as of March 31, 2022) regarding intangible assets acquired in business combination as general and administrative expenses. |
| (b) | Stock-based compensation includes R$ 2,376 (R$ 1,182 as of March 31, 2022) classified as cost of services and R$ 3,017 (R$ 57 as of March 31, 2022) as expenses. |
| (c) | Consulting expenses in the total amount of R$ 340 (R$ 2,695 as of March 31, 2022) related to acquisitions. |
| (d) | Other post-acquisition expenses include the present value adjustment on account payable for business combination (R$1,589) and other expenses related to the obligation of business combination (R$195). |
| (e) | Short-term leases include R$ 931 related leases of low-value assets and R$ 783 related to other condominium costs. (R$1,036 and R$681 respectively in March 31, 2022). |
22 Net finance costs
|
. |
March 31, 2023 |
March 31, 2022 |
|
|
Finance income: |
|
|
|
|
Income from financial investments |
2,750 |
1,384 |
|
|
Foreign-exchange gain |
9,073 |
62,034 |
|
|
Gains on derivatives |
8,602 |
5,801 |
|
|
Interest received |
43 |
200 |
|
|
Positive monetary variation |
195 |
4 |
|
|
Other finance income |
1 |
159 |
|
|
Total |
20,664 |
69,582 |
|
|
Finance costs: |
|
|
|
|
Exchange variation loss |
(11,302) |
(60,688) |
|
|
Loss on derivatives |
(4,058) |
(805) |
|
|
Interest and charges on loans and leases (note 12) |
(23,343) |
(18,137) |
|
|
Negative monetary variation |
(1,365) |
(2,033) |
|
|
Other finance costs |
(564) |
(4,631) |
|
|
Total |
(40,632) |
(86,294) |
|
|
Net finance costs |
(19,968) |
(16,712) |
23 Income tax and social contribution
Income tax expenses are recognized at an amount determined by multiplying the profit (loss) before tax for interim reporting period based on the Management's best estimate of the weighted average annual income tax rate expected for the full financial year, adjusted for the tax effect of certain items recognized in full in the interim period. Income tax expenses include current and deferred tax and social contribution on net profit.
The Group’s consolidated effective tax rate in respect of continuing operations for the three-month period ended March 31, 2023 was 18% and for the three-month period ended March 31, 2022 was 34%.
CI&T Inc.
Unaudited condensed consolidated interim financial statements
March 31, 2023
24 Earnings per share
Basic and diluted earnings per share
The calculation of basic earnings per share was based on the net income attributed to holders of common shares and the weighted average number of outstanding common shares. The calculation of diluted earnings per share was based on the net income attributed to holders of common shares and the weighted average number of outstanding common shares, after adjustments for all potential diluted common shares.
|
|
March 31, 2023 |
March 31, 2022 |
|
|
Numerator |
|
|
|
|
Profit attributable to holders of common shares |
52,382 |
29,223 |
|
|
Denominator |
|
|
|
|
Weighted average number of basic shares held by shareholders |
133,834,456 |
132,639,430 |
|
|
Earnings per share – basic |
0.39 |
0.22 |
|
|
|
|
|
|
|
Numerator |
|
|
|
|
Profit attributable to holders of common shares |
52,382 |
29,223 |
|
|
Denominator |
|
|
|
|
Weighted average number of diluted shares held by shareholders |
137,279,821 |
132,963,392 |
|
|
Net earnings per share – diluted |
0.38 |
0.22 |
Weighted average number of common shares
|
|
March 31, 2023 |
March 31, 2022 |
|
|
Weighted average common shares (basic) |
133,834,456 |
132,639,430 |
|
|
Effect of stock options when exercised |
3,445,365 |
323,962 |
|
|
Weighted average number of common shares |
137,279,821 |
132,963,392 |
CI&T Inc.
Unaudited condensed consolidated interim financial statements
March 31, 2023
25 Financial instruments and risk management
25.1 Financial instrument categories
The Group maintains operations with derivative and non-derivative financial instruments. These instruments are managed to assure liquidity and profitability. The control policy consists of monitoring the terms contracted against the terms and condition current in the market. The Company does not make investments of a speculative nature in derivatives or any other risk assets.
The estimated fair value of the Group's financial instruments considered the following methods and assumptions:
- Cash and cash equivalents and financial investment: recognized at cost plus income earned up to the closing date of the financial statements, which approximate their fair value.
- Trade receivables: arise directly from the Group's operations, classified at amortized cost, are recorded at their original values, adjusted based on the exchange rate changes, when applicable, and subject to a provision for losses. Their carrying amount is a reasonable approximation of fair value.
- Loans and borrowings: classified as financial liabilities measured at amortized cost and are recorded at their contractual values. The contractual flow of loans and borrowings is adjusted to the future value of the liabilities considering the interest until maturity.
- Derivative financial instruments: The financial instruments were valued by calculating the present value through the use of market curves that impact the specific instrument on the calculation dates. For this, future curves of US$ Libor 3M, exchange coupon, and currency quotation are used. For interest rate swaps, the present value of the asset position and the liability position are both estimated by discounting cash flows at the interest rate of the currency in which the swap is denominated. The difference between the present value of the asset and the liability position of the swap generates its fair value. For exchange forward swaps, the present value of the asset position and the liability position are both estimated by discounting cash flows at the rate of currency in which the swap is denominated. The difference between the present value of the asset and the liability position of the swap generates its fair value.
- Non-derivatives financial instruments: Based on the Group's risk management and considering the existing natural hedge on exchange rate variations, the Group designated hedge relationships between “highly probable future transactions” (hedged item) and non-derivative financial instruments (hedging instruments), and their exchange effects were recognized at the same time in the OCI. The exchange rate variations in proportions of cash flows from non-derivative financial instruments were designated as hedging instruments. At the inception of designated hedging relationships, the Group documented the risk management objective and strategy for undertaking the hedge. The Group also documented the economic relationship between the hedged item and the hedging instrument, including identification of: (i) the hedging instrument; (ii) the hedged item; (iii) the nature of the risk being hedged; and (iv) the assessment whether the hedging relationship meets the hedge effectiveness requirements.
CI&T Inc.
Unaudited condensed consolidated interim financial statements
March 31, 2023
The following table shows the carrying amounts and fair values of financial assets and financial liabilities, segregated by category:
|
|
March 31, 2023 |
||||||
|
|
Amortized cost |
Assets / liabilities measured at FVTPL |
Assets / liabilities measured at FVOCI |
Total |
|||
|
Financial assets |
|
|
|
|
|||
|
Cash and cash equivalents |
251,550 |
- |
- |
251,550 |
|||
|
Financial investments |
93,884 |
- |
- |
93,884 |
|||
|
Trade receivables |
445,455 |
- |
- |
445,455 |
|||
|
Contract assets |
232,459 |
- |
- |
232,459 |
|||
|
Derivatives |
- |
9,240 |
- |
9,240 |
|||
|
Non-derivatives financial instruments |
- |
- |
30,698 |
30,698 |
|||
|
Other assets |
35,493 |
- |
- |
35,493 |
|||
|
|
1,058,841 |
9,240 |
30,698 |
1,098,779 |
|||
|
Financial liabilities |
|
|
|
|
|||
|
Suppliers and other payables |
21,542 |
- |
- |
21,542 |
|||
|
Loans and borrowings |
948,324 |
- |
- |
948,324 |
|||
|
Lease liabilities |
56,958 |
- |
- |
56,958 |
|||
|
Accounts payable for business combination |
67,467 |
137,219 |
- |
204,686 |
|||
|
Derivatives |
- |
450 |
- |
450 |
|||
|
Non-derivatives financial instruments |
- |
- |
40,052 |
40,052 |
|||
|
Contract liabilities |
20,491 |
- |
- |
20,491 |
|||
|
Other liabilities |
53,674 |
- |
- |
53,674 |
|||
|
|
1,168,456 |
137,669 |
40,052 |
1,346,177 |
|||
CI&T Inc.
Unaudited condensed consolidated interim financial statements
March 31, 2023
|
|
December 31, 2022 |
||||||
|
|
Amortized cost |
Assets / liabilities measured at FVTPL |
Assets / liabilities measured at FVOCI |
Total |
|||
|
Financial assets |
|
|
|
|
|||
|
Cash and cash equivalents |
185,727 |
- |
- |
185,727 |
|||
|
Financial investments |
96,299 |
- |
- |
96,299 |
|||
|
Trade receivables |
501,671 |
- |
- |
501,671 |
|||
|
Contract assets |
217,250 |
- |
- |
217,250 |
|||
|
Derivatives |
- |
11,194 |
- |
11,194 |
|||
|
Non-derivatives financial instruments |
- |
- |
19,637 |
19,637 |
|||
|
Other assets |
41,923 |
- |
- |
41,923 |
|||
|
|
1,042,870 |
11,194 |
19,637 |
1,073,701 |
|||
|
Financial liabilities |
|
|
|
|
|||
|
Suppliers and other payables |
33,376 |
- |
- |
33,376 |
|||
|
Loans and borrowings |
974,231 |
- |
- |
974,231 |
|||
|
Lease liabilities |
62,808 |
- |
- |
62,808 |
|||
|
Accounts payable for business combination |
68,561 |
136,388 |
- |
204,949 |
|||
|
Derivatives |
|
4,109 |
- |
4,109 |
|||
|
Non-derivatives financial instruments |
|
- |
35,169 |
35,169 |
|||
|
Contract liabilities |
32,136 |
- |
- |
32,136 |
|||
|
Other liabilities |
51,031 |
- |
- |
51,031 |
|||
|
|
1,222,143 |
140,497 |
35,169 |
1,397,809 |
|||
25.2 Financial risk management
The Group’s operations are subject to the following risk factors:
a. Market risks
The Group is exposed to market risks resulting from the normal course of its activities, such as inflation, interest rates and exchange rate changes.
Thus, the Group's operating results may be affected by changes in national economic policy, especially regarding short and long-term interest rates, inflation targets and exchange rate policy. Exposures to market risk are measured by sensitivity analysis.
Management interest rate benchmark reform and associated risks.
A fundamental reform of major interest rate benchmarks is being undertaken globally, including the replacement of some interbank offered rates (lBORs) with alternative nearly risk-free rates (referred to as ‘lBOR reform’). In 2021, the Group undertook amendments to most financial instruments with contractual terms indexed to lBORs such that they incorporated new benchmark rates. As of March 31, 2023, the Group’s remaining lBOR exposure is indexed to US dollar LIBOR. The alternative reference rate for all US dollar LIBOR is the Secured Overnight Financing Rate (SOFR). The Group finished the process of implementing appropriate fallback clauses for all US dollar LIBOR indexed exposures in 2021. These clauses automatically switch the instruments from USD LIBOR to SOFR as and when USD LIBOR ceases. As announced by the Financial Conduct Authority (FCA) in early 2022, the panel bank submissions for US dollar LIBOR will cease in mid-2023.
CI&T Inc.
Unaudited condensed consolidated interim financial statements
March 31, 2023
The risk Management monitors and manages the Group´s transition to alternative rates. The Management evaluates the extent to which contracts reference lBOR cash flows, whether such contracts will need to be amended as a result of lBOR reform and how to manage communication about lBOR reform with counterparties. The Management reports to the Company´s board of directors regularly and collaborates with other business functions as needed. It provides periodic reports to management of interest rate risk and risks arising from lBOR reform.
a.1 Foreign currency – Exchange rate changes
The Group is exposed to foreign exchange risk to the extent that there is a mismatch between the currencies in which sales, purchases, receivables, and borrowings are denominated and the respective functional currencies of the Company and its subsidiaries.
Therefore, foreign exchange risk is inherent to the Group’s business model. The Group’s revenue is mainly denominated in foreign currency and, consequently, is exposed to exchange rate changes. The Group’s expenses, on the other hand, are mainly denominated in the Group’s functional currency (Brazilian Reais) and, consequently, are not exposed to exchange rate changes. The Group is exposed to exchange rate risk on its financial investments, suppliers and other payables, trade receivables, loans and borrowings, accounts payable for business combination, lease liabilities and derivatives. See below the total exposure to foreign currency:
|
|
March 31, 2023 |
December 31, 2022 |
|||||||||
|
|
US$ |
£ |
Other |
US$ |
£ |
Other |
|||||
|
Financial investments |
43,602 |
50,282 |
- |
96,299 |
- |
- |
|||||
|
Suppliers and other payables |
(4,319) |
(1,094) |
(1,789) |
(4,229) |
(2,264) |
(2,078) |
|||||
|
Trade receivables |
293,394 |
47,322 |
10,680 |
304,617 |
51,152 |
12,306 |
|||||
|
Loans and borrowings |
(224,595) |
- |
- |
(223,512) |
- |
- |
|||||
|
Lease liabilities |
(26,773) |
(236) |
(1,914) |
(29,147) |
(1,009) |
(2,493) |
|||||
|
Accounts payable for business combination |
(76,385) |
(82,591) |
- |
(76,859) |
(83,768) |
- |
|||||
|
Derivatives |
(450) |
- |
- |
(4,109) |
- |
- |
|||||
|
Net exposure |
4,474 |
13,683 |
6,977 |
63,060 |
(35,889) |
7,735 |
|||||
Cash flow hedge for the Group's future Revenues
Considering the natural hedge and the risk management strategy, the Group designates hedging relationships to account for the effects of the existing hedge between a foreign exchange gain or loss from proportions of its long-term debt obligations (denominated in U.S. dollars) and foreign exchange gain or loss of its highly probable U.S. dollar denominated future export revenues, so that gains or losses associated with the hedged transaction (the highly probable future exports) and the hedging instrument (debt obligations) are recognized in the statement of profit or loss in the same periods in which they will occur.
CI&T Inc.
Unaudited condensed consolidated interim financial statements
March 31, 2023
The schedule of cash flow hedge involving the Company´s future exports as of March 31, 2023 is set below:
|
|
|
|
|
|
Present value of hedging instrument notional value at March 31, 2023 |
|
Hedging Instrument |
Hedged Transaction |
Nature of the Risk |
Maturity Date |
USD |
BRL |
|
Foreign exchange gains and losses on proportion of non-derivative financial instruments cash flows |
Foreign exchange gains and losses of highly probable future monthly exports revenues |
Foreign Currency - Real vs U.S. Dollar |
2023 to 2026 |
|
|
|
Citibank (i) |
|
|
2026 |
27,000 |
137,171 |
|
Citibank (ii) |
|
|
2023 |
3,000 |
15,241 |
|
Bradesco (ii) |
|
|
2023 |
3,000 |
15,241 |
|
Citibank (ii) |
|
|
2023 |
2,000 |
10,161 |
|
Itaú (ii) |
|
|
2023 |
10,000 |
50,804 |
|
Total amounts designated as of March 31, 2023 |
|
|
|
45,000 |
228,618 |
(i) Export credit note - NCE: Refers to financing to export software development services.
(ii) Advance on Foreign Exchange Contract (ACC).
Changes in the fair value of US$ foreign exchange debt obligation (non-derivative financial instruments) designated as effective cash flow hedges have their effective component recorded in Equity, Other Comprehensive Income (“OCI”) and the ineffective component recorded in Statement of Profit or Loss, in finance income (expense). The amounts accumulated in Equity are recognized in the Statement of Profit or Loss in the years in which the hedged item affects the result, the effects of which are appropriated to the result, in order to minimize the variations in the hedged item.
The individual hedge relationships are established on a one-to-one basis, that is, the “highly probable exports” of each month and the proportions of cash flows from foreign exchange debt obligation made abroad, used in each relationship and individual hedge, have the same face value in US dollars.
The exposure of the Group's future exports in hard currency to the risk of variations in the R$/US$ exchange rate (liability position) is offset by an inverse exposure equivalent to its US dollars debt (asset position) to the same type of risk.
Hedge Accounting Effects
The movement of exchange variation accumulated in other comprehensive income as of March 31, 2023 and December 31, 2022, resulting from completed and expected exports are set out below:
|
|
Exchange variation |
|
Balance as of January 1, 2022 |
- |
|
Recognized in Other comprehensive income |
(23,855) |
|
Reclassified to the statements of profit or loss - occurred exports |
8,323 |
|
Balance as of December 31, 2022 |
(15,532) |
|
Recognized in Other comprehensive income |
6,178 |
|
Balance as of March 31, 2023 |
(9,354) |
As of March 31, 2023, the annual expectation of realization of the exchange rate variation balance accumulated in equity is R$ 1,317.
CI&T Inc.
Unaudited condensed consolidated interim financial statements
March 31, 2023
Sensitivity analysis for exchange rate risk
|
|
Risk |
Exposure in US$ |
Probable scenario (I) |
Adverse Scenario (II) |
Remote Scenario (III) |
||||
|
Exchange variation in the period |
Foreign currency appreciation – US$ |
5.0804 |
5.0000 |
6.2500 |
7.5000 |
||||
|
Financial investments |
|
8,582 |
(692) |
10,036 |
20,763 |
||||
|
Suppliers and other payables |
|
(850) |
69 |
(994) |
(2,056) |
||||
|
Trade receivables |
|
57,750 |
(4,644) |
67,544 |
139,731 |
||||
|
Loans and borrowings |
|
(44,208) |
3,555 |
(51,705) |
(106,965) |
||||
|
Derivatives |
|
19,107 |
(1,538) |
22,346 |
46,230 |
||||
|
Lease liabilities |
|
(5,270) |
423 |
(6,165) |
(12,752) |
||||
|
Accounts payable for business combination |
|
(14,887) |
1,950 |
(16,659) |
(35,268) |
||||
|
Net effect |
|
|
(877) |
24,403 |
49,683 |
|
|
Risk |
Exposure in £ |
Probable scenario (I) |
Adverse Scenario (II) |
Remote Scenario (III) |
||||
|
Exchange variation in the year |
Foreign currency appreciation – £ |
6.2845 |
5.7692 |
7.2115 |
8.6538 |
||||
|
Financial investments |
|
8,001 |
(4,123) |
7,417 |
18,957 |
||||
|
Suppliers and other payables |
|
(174) |
90 |
(161) |
(412) |
||||
|
Trade receivables |
|
7,530 |
(3,880) |
6,981 |
17,841 |
||||
|
Lease liabilities |
|
(38) |
17 |
(38) |
(93) |
||||
|
Accounts payable for business combination |
|
(13,142) |
6,772 |
(12,183) |
(31,137) |
||||
|
Net effect |
|
|
(1,124) |
2,016 |
5,156 |
a.2 Interest rate risk
Derives from the possibility of the Group incurring gains or losses resulting from changes in interest rates applicable to its financial assets and liabilities. The Group may also enter into derivative contracts in order to mitigate this risk.
a.3 Sensitivity analysis of non-derivative financial instruments
Exchange rate fluctuation and changes in interest rates may positively or adversely affect the financial statements, due to an increase or decrease in the balances of trade receivables and investments in foreign currency and the variation in the balances of financial investments and loans and borrowings.
CI&T Inc.
Unaudited condensed consolidated interim financial statements
March 31, 2023
The Group mitigates its risks relating to non-derivative financial assets and liabilities substantially through the contracting of derivative financial instruments. Accordingly, the Group identified the main risk factors that may generate losses for its operations with derivative financial instruments and this sensitivity analysis is based on three scenarios that may impact the Group’s future results and cash flows, as described below:
| (i) | Probable scenario: The Group’s projections, based on internal and external data, considered the highest projection expected by the Company for the next 12 months: (i) the interest rate index in order to analyze the sensitivity of the index in short-term investments and loans and borrowings was 13.05% for CDI, 5.30% for Libor (only applicable for some loans and borrowings) and 5.30 for SOFR; (ii) the exchange rate of R$ 5.00 for US$ and R$ 5.77 for £, related to the closing rate projected by the Company, for the purposes of analyzing the foreign exchange exposure. Based on these factors, variations in the adverse and remote scenarios were calculated. |
| (ii) | Adverse scenario: considered a variation of 25% in the main risk factor of each transaction. |
| (iii) | Remote scenario: considered a variation of 50% in the main risk factor of each transaction. |
For each scenario, the gross finance income or finance costs were calculated, excluding taxes and the maturity flow of each agreement. The base date considered was March 31, 2023, projecting the indexes for one year and verifying their sensitivity in each scenario.
Sensitivity analysis for interest rate risk
|
|
Risk |
Exposure in R$ |
Period rates |
Probable scenario (I) |
Adverse Scenario (II) |
Remote Scenario (III) |
|||||
|
Short-term financial investments |
Interest rate increase - CDI |
97,506 |
13.81% |
13.05% |
16.31% |
19.58% |
|||||
|
|
|
|
|
(741) |
2,438 |
5,626 |
|||||
|
Loans and borrowings |
Interest rate increase - CDI |
(283,444) |
13.81% |
13.05% |
16.31% |
19.58% |
|||||
|
|
|
|
|
2,154 |
(7,086) |
(16,355) |
|||||
|
Accounts payable for business combination |
Interest rate increase - CDI |
(44,735) |
13.81% |
13.05% |
16.31% |
19.58% |
|||||
|
|
|
|
|
340 |
(1,118) |
(2,581) |
|||||
|
Loans and borrowings |
Interest rate increase - Libor |
(129,830) |
4.79% |
5.30% |
6.62% |
7.95% |
|||||
|
|
|
|
|
(659) |
(2,376) |
(4,103) |
|||||
|
Loans and borrowings |
Interest rate increase - SOFR |
(336,966) |
4.56% |
5.30% |
6.63% |
7.95% |
|||||
|
|
|
|
|
(2,494) |
(6,975) |
(11,423) |
|||||
|
Derivatives (interest rate swap) |
Interest rate increase - Libor |
129,830 |
4.79% |
5.30% |
6.62% |
7.95% |
|||||
|
|
|
|
|
659 |
2,376 |
4,103 |
|||||
|
Net effect |
|
|
|
(741) |
(12,741) |
(24,733) |
b. Credit Risk
Credit risk refers to the risk that a counterparty will not comply with its contractual obligations, causing the Group to incur financial losses. Credit risk is the risk of a counterparty in a business transaction not complying with an obligation provided by a financial instrument or an agreement with a client, which would cause financial loss. To mitigate these risks, the Group analyzes the financial and equity condition of its counterparties, as well as the definition of credit limits and permanent monitoring of outstanding positions.
CI&T Inc.
Unaudited condensed consolidated interim financial statements
March 31, 2023
The Group applies the simplified standard approach to commercial financial assets, where the provision for losses is analyzed over the remaining life of the asset.
In addition, the Group is exposed to credit risk with respect to financial guarantees granted to banks.
The Group held cash and cash equivalents of R$ 251,550 on March 31, 2023 (R$ 185,727 as of December 31, 2022) and financial investments of R$ 93,884 on March 31, 2023 (R$ 96,299 as of December 31, 2022). The cash and cash equivalents and financial investments are held with bank and financial institution counterparties, which are rated BB- to A+, based on Standard & Poor’s ratings.
The carrying amount of financial assets represents the maximum credit exposure. The maximum credit risk exposure on the date of the financial statements is:
|
|
March 31, 2023 |
December 31, 2022 |
|
|
Hedge financial instruments – SWAP |
9,240 |
11,194 |
|
|
Cash and cash equivalents |
251,550 |
185,727 |
|
|
Financial investments |
93,884 |
96,299 |
|
|
Trade receivables |
445,455 |
501,671 |
|
|
Contract assets |
232,459 |
217,250 |
|
|
Other receivables (current and non-current) |
35,493 |
41,923 |
|
|
|
1,068,081 |
1,054,064 |
At 31 March 2023, the exposure to credit risk for trade receivables, contract assets and other receivables by geographic region was as follows:
|
. |
March 31, 2023 |
December 31, 2022 |
|
|
NAE (North America and Europe) |
454,409 |
499,626 |
|
|
United States of America |
365,815 |
426,166 |
|
|
Europe |
88,594 |
73,460 |
|
|
LATAM (Latin America) |
244,066 |
246,270 |
|
|
APJ (Asia, Pacific and Japan) |
14,932 |
14,948 |
|
|
Total (Note 22) |
713,407 |
760,844 |
CI&T Inc.
Unaudited condensed consolidated interim financial statements
March 31, 2023
c. Liquidity risk
The Group monitors liquidity risk by managing its cash resources and financial investments.
Liquidity risk is also managed by the Group through its cash flow projection, which aims to ensure the availability of funds to meet the Group’s both operational and financial obligations.
The Group also maintains approved credit lines with financial institutions in order to adequate levels of liquidity in the short, medium and long terms.
The maturities of the long-term installments of the loans are described in note 13.
The following are the remaining contractual maturities of financial liabilities on the reporting date. The amounts are gross and undiscounted, including contractual interest payments and excluding the impact of netting agreements:
|
|
March 31, 2023 |
||||||||||
|
|
Carrying amount |
Cash contractual cash flow |
6 months or less |
6-12 months |
1-2 years |
2-5 Years |
|||||
|
Non-derivative financial liabilities |
|
|
|
|
|
|
|||||
|
Trade payables |
21,542 |
21,542 |
21,542 |
- |
- |
- |
|||||
|
Loans and borrowings |
948,324 |
1,130,255 |
189,551 |
97,521 |
245,857 |
597,326 |
|||||
|
Lease liabilities |
56,958 |
64,772 |
15,287 |
8,651 |
16,584 |
24,250 |
|||||
|
Accounts payable for business combination |
204,686 |
226,155 |
64,949 |
7,468 |
112,523 |
41,215 |
|||||
|
Contract liabilities |
20,491 |
20,491 |
20,491 |
- |
- |
- |
|||||
|
Other payables (current and non-current) |
53,674 |
53,674 |
53,674 |
- |
- |
- |
|||||
|
Derivatives |
450 |
450 |
450 |
- |
- |
- |
|||||
|
Non-derivatives financial instruments |
40,052 |
40,052 |
40,052 |
- |
- |
- |
|||||
|
|
1,346,177 |
1,557,391 |
405,996 |
113,640 |
374,964 |
662,791 |
|||||
|
|
December 31, 2022 |
||||||||||
|
|
Carrying amount |
Cash contractual cash flow |
6 months or less |
6- 12 months |
1-2 years |
2-5 Years |
|||||
|
Non-derivative financial liabilities |
|
|
|
|
|
|
|||||
|
Trade payables |
33,376 |
33,376 |
33,376 |
- |
- |
- |
|||||
|
Loans and borrowings |
974,231 |
1,176,743 |
146,564 |
107,207 |
273,298 |
649,674 |
|||||
|
Lease liabilities |
62,808 |
70,837 |
13,903 |
11,480 |
17,981 |
27,473 |
|||||
|
Accounts payable for business combination |
204,949 |
229,547 |
64,888 |
7,484 |
95,858 |
61,317 |
|||||
|
Contract liabilities |
32,136 |
32,136 |
32,136 |
- |
- |
- |
|||||
|
Other payables (current and non-current) |
51,031 |
51,031 |
51,031 |
- |
- |
- |
|||||
|
Derivatives |
4,109 |
4,109 |
4,109 |
- |
- |
- |
|||||
|
Non-derivatives financial instruments |
35,169 |
35,169 |
35,169 |
- |
- |
- |
|||||
|
|
1,397,809 |
1,632,948 |
381,176 |
126,171 |
387,137 |
738,464 |
|||||
CI&T Inc.
Unaudited condensed consolidated interim financial statements
March 31, 2023
25.3 Derivative financial instruments
The Group held derivative financial instruments to hedge its foreign currency and interest rate risk exposures.
The Group entered into an interest rate swap transaction with the purpose of hedging the exposure to variable interest rate related to the Export Credit Note – NCE with Citibank.
In May 2022, the Group entered a swap operation exchanging the CDI based rate to a US$ prefixed rate, related to a portion of an Export Credit Note - NCE with Bradesco.
The interest rate profile of the Group’s interest-bearing financial instruments, as reported to the Group’s Management, is as follows:
|
|
March 31, 2023 |
|||||||||
|
Maturity |
Notional (US$) |
Amount in R$ |
Floating rate receivable |
Fixed rate payable |
Fair value |
|||||
|
07/16/2026 |
30,000 |
152,100 |
3-months LIBOR |
3.07% |
9,240 |
|||||
|
07/07/2026 |
- |
100,000 |
CDI |
Foreign Exchange + 4.90% |
(450) |
|||||
|
|
|
|
|
|
8,790 |
|||||
|
|
December 31, 2022 |
|||||||||
|
Maturity |
Notional (US$) |
Amount in R$ |
Floating rate receivable |
Fixed rate payable |
Fair value |
|||||
|
07/16/2026 |
30,000 |
152,100 |
3-months LIBOR |
3.07% |
11,194 |
|||||
|
07/07/2026 |
- |
100,000 |
CDI |
Foreign Exchange + 4.90% |
(4,109) |
|||||
|
|
|
|
|
|
7,085 |
|||||
CI&T Inc.
Unaudited condensed consolidated interim financial statements
March 31, 2023
25.4 Classification of financial instruments by type of measurement of fair value
The Group has financial instruments measured at fair value, which are qualified as defined below:
|
|
Carrying Amount |
Fair value |
|||||
|
|
March 31, 2023 |
December 31, 2022 |
March 31, 2023 |
December 31, 2022 |
|||
|
Level 2 |
|
|
|
|
|||
|
Derivatives: |
|
|
|
|
|||
|
Interest rate swap |
8,790 |
7,085 |
8,790 |
7,085 |
|||
|
Total |
8,790 |
7,085 |
8,790 |
7,085 |
|||
|
Non-derivatives: |
|
|
|
|
|||
|
Lease liabilities |
(56,958) |
(62,808) |
(56,958) |
(62,808) |
|||
|
Loans and borrowings |
(948,324) |
(974,231) |
(948,324) |
(974,231) |
|||
|
Accounts payable for business combination |
(204,686) |
(204,949) |
(204,686) |
(204,949) |
|||
|
Total |
(1,209,968) |
(1,241,988) |
(1,209,968) |
(1,241,988) |
|||
|
Total |
(1,201,178) |
(1,234,903) |
(1,201,178) |
(1,234,903) |
|||
Cash and cash equivalents, financial investments, trade receivables, and suppliers and other payables were not included in the table above. The Group understands that these financial instruments have no classification, as the carrying amount of these items is a reasonable approximation of fair value.
26 Related parties
Transactions with key management personnel
The Group paid R$ 4,540 as of March 31, 2023 (R$ 4,700 as of March 31, 2022) as direct compensation to key management personnel. These amounts correspond to the executive board compensation, related social charges and short-term benefits and are recorded under line “General and administrative expenses”.
The executive officers also participate in the Group's stock-based compensation program (see note 18). For the period ended on March 31, 2023, R$ 5 (R$ 12 on March 31, 2022) were recognized in the statement of profit or loss.
The Group has no additional post-employment obligation, as well as no other long-term benefits, such as premium leave and other severance benefits. The Group also does not offer other benefits in connection with the dismissal of its Senior Management’s members, in addition to those defined by the Brazilian labor legislation in force.
CI&T Inc.
Unaudited condensed consolidated interim financial statements
March 31, 2023
27 Operating segments
Operating segments are defined based on business activities that reflect how CODM - Chief Operating Decision Maker reviews financial information for decision.
The Group's CODM is the Group's Board of Director. The CODM is in charge of the operational decisions of resource allocation and performance evaluation. The CODM considers the whole Group as a single operating and reportable segment, monitoring operations, making decisions on fund allocation and evaluating performance based on a single operating segment.
The CODM reviews relevant financial data on a consolidated basis for all subsidiaries. CODM makes decisions and regularly evaluates the performance of Group’s services as a whole in a single operational and reportable segment.
The table below summarizes net revenues by geographic region:
|
. |
March 31, 2023 |
March 31, 2022 |
|
|
North America |
282,464 |
203,940 |
|
|
Europe |
54,648 |
37,589 |
|
|
LATAM (Latin America) |
240,616 |
234,706 |
|
|
APJ (Asia, Pacific and Japan) |
32,263 |
15,637 |
|
|
Total (Note 20) |
609,991 |
491,872 |
Net revenues by geographic area were determined based on the country where the sale was made. The net revenue from a single customer represents 11.1% of the Company’s total net revenues as of March 31, 2023 (15.4% as of March 31, 2022).
Revenue by client concentration
The following table sets forth net revenue contributed by the top client, and top ten clients for the periods indicated:
|
. |
March 31, 2023 |
March 31, 2022 |
|
|
Top client |
67,425 |
75,831 |
|
|
Top 10 clients |
270,461 |
253,427 |
Geographic information of the Group's non-current assets
The table below summarizes non-current assets, except deferred taxes, based on assets geographic location:
|
. |
March 31, 2023 |
December 31, 2022 |
|
|
Brazil |
811,511 |
819,873 |
|
|
Cayman |
398,757 |
405,145 |
|
|
United States of America |
650,799 |
676,167 |
|
|
China |
1,918 |
2,317 |
|
|
Australia |
2,515 |
2,987 |
|
|
United Kingdom |
1,136 |
1,804 |
|
|
Canada |
268 |
280 |
|
|
Portugal |
625 |
569 |
|
|
Other countries |
1,581 |
1,858 |
|
|
Total |
1,869,110 |
1,911,000 |
CI&T Inc.
Unaudited condensed consolidated interim financial statements
March 31, 2023
28 Subsequent events
Share repurchase program
On May 17, 2023, the Board of Directors approved a share repurchase program with authorization to purchase up to 1.5 million of CI&T’s class A shares. The share repurchase program will have a term of 12 months, may be suspended or discontinued at any time, and does not obligate the Company to acquire any amount of common stock.
CI&T BOARD OF DIRECTORS APPROVES SHARE REPURCHASE PROGRAM
New York - May 19, 2023 - CI&T Inc (NYSE: CINT, “CI&T”), a global digital specialist, announces that its Board of Directors approved a share repurchase program, pursuant to which CI&T may repurchase up to 1.5 million of its outstanding class A common shares. The program was approved taking into consideration the Company's commitments to deliver shares under its stock-based compensation plan and M&A transactions.
CI&T may repurchase shares of its common stock from time to time through open market purchases, in privately negotiated transactions, or by other means, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, in accordance with applicable securities laws and other restrictions.
The timing and total amount of stock repurchases will depend upon business, economic and market conditions, corporate and regulatory requirements, prevailing stock prices, and other considerations. The share repurchase program will have a term of 12 months and may be suspended or discontinued at any time. CI&T is not obligated to acquire any amount of common stock under the share repurchase program.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: May 19, 2023
| CI&T Inc |
|||
| By: | /s/ Stanley Rodrigues | ||
| Name: Stanley Rodrigues | |||
| Title: Chief Financial Officer | |||